What is the main purpose of deflating a monetary series by a price index?
Correct answer: A. To convert nominal values into real values
- A. To convert nominal values into real values
- B. To convert real values into nominal values
- C. To remove seasonal variation only
- D. To calculate the number of observations
Explanation
Deflation removes the effect of general price changes so that values from different periods can be compared in real terms. It does not by itself remove seasonal fluctuations.
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