Questions: The broadest measure to adjust nominal GDP for price changes is Multiple Choice the Consumer Price Index (CPI). the Producer Price Index (PPI). the GDP price index. exchange rates.

The answer is: the GDP price index.

Explanation for each option:

1. The Consumer Price Index (CPI):

   • The CPI measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. While it is a useful measure for understanding inflation from the consumer's perspective, it does not cover the entire economy and is therefore not the broadest measure for adjusting nominal GDP.

2. The Producer Price Index (PPI):

   • The PPI measures the average change over time in the selling prices received by domestic producers for their output. It focuses on the prices of goods at the wholesale level, which is narrower in scope compared to the entire economy. Thus, it is not the broadest measure for adjusting nominal GDP.

3. The GDP price index:

   • The GDP price index, also known as the GDP deflator, measures the changes in prices for all of the goods and services produced in an economy. It is the broadest measure because it includes all components of GDP: consumption, investment, government spending, and net exports. This makes it the most comprehensive tool for adjusting nominal GDP to reflect real economic activity.

4. Exchange rates:

   • Exchange rates refer to the value of one currency for the purpose of conversion to another. They are not a measure of price changes within an economy and therefore are not used to adjust nominal GDP for price changes.

In summary, the GDP price index is the broadest measure to adjust nominal GDP for price changes because it encompasses the entire range of goods and services produced in the economy.