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Chapter 9: Q 11. (page 243)

How do economists use a basket of goods and

services to measure the price level?

Short Answer

Expert verified

By using various methods economists do this task.

Step by step solution

01

Step 1. Definition

Price levels are constituted by index number while the rate of inflation is the rate of growth of price level.

02

Step 2. 

Economists measure the price level by a method like first they give the weights to the goods and services that people buy on actual quantities and then they compute their weighted average of individual baskets.

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