Q. With reference to the Producer Price Index (PPI), consider the following statements:
1.The PPI measures the average change in the price a producer receives for their goods and services.
2.It includes taxes and trade margins, while WPI does not.
3.The Working Group for WPI revision is also mandated to recommend a roadmap for the switch from WPI to PPI.
Which of the statements given above is/are correct?

[A] 1 only

[B] 1 and 3 only

[C] 2 and 3 only

[D] 1, 2 and 3

Answer: B
Notes:

Correct Answer: B Explanation:

  • Statement 1 is correct. The definition of PPI states that it measures the average change in the price a producer receives for their goods/services sold.
  • Statement 2 is incorrect. The new WPI series (2011-12) excludes taxes, while PPI also excludes taxes and trade margins. Some variants of PPI may include taxes, but it is not a defining feature that distinguishes it from the WPI in this context.
  • Statement 3 is correct. The terms of reference for the Working Group include suggesting a roadmap for the switch from WPI to PPI.
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