Questions: The major difference between the Consumer Price Index and the Producer Price Index is that: a) the PPI is based on the cost of a basket typically purchased by producers, while the CPI is based on the cost of a basket typically purchased by consumers. b) the PPI is based on retail prices and CPI is based on wholesale prices. c) the PPI measures the cost of living of self-employed workers and the CPI measures the cost of living of salaried workers. d) the PPI generally registers a higher rate of inflation than the CPI.

The answer is the first one (or A): the PPI is based on the cost of a basket typically purchased by producers, while the CPI is based on the cost of a basket typically purchased by consumers.

Explanation for each option:

a) Correct. The Producer Price Index (PPI) measures the average change over time in the selling prices received by domestic producers for their output. It is based on the cost of a basket of goods and services typically purchased by producers. On the other hand, the Consumer Price Index (CPI) measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.

b) Incorrect. The PPI is not based on retail prices; it is based on wholesale prices or the prices received by producers. The CPI, however, is based on retail prices or the prices paid by consumers.

c) Incorrect. The PPI does not specifically measure the cost of living of self-employed workers, nor does the CPI specifically measure the cost of living of salaried workers. Both indices measure price changes for different baskets of goods and services, but they are not segmented by employment status.

d) Incorrect. While the PPI and CPI can show different rates of inflation due to the different baskets of goods and services they measure, it is not accurate to say that the PPI generally registers a higher rate of inflation than the CPI. The rates can vary depending on economic conditions and other factors.

Summary: The major difference between the Consumer Price Index (CPI) and the Producer Price Index (PPI) is that the PPI is based on the cost of a basket typically purchased by producers, while the CPI is based on the cost of a basket typically purchased by consumers.