Distinguish among the three main price indexes frequently used by economies measuring in inflation

The three main price indexes frequently used by economies to measure inflation are the Consumer Price Index (CPI), the Producer Price Index (PPI), and the GDP deflator.

1. Consumer Price Index (CPI): This index measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services, including food, transportation, medical care, and all other goods and services. The CPI is calculated by taking price changes for each item in the predetermined basket of goods and averaging them; the goods are weighted according to their importance. Changes in the CPI are used to assess price changes associated with the cost of living.

2. Producer Price Index (PPI): This index measures the average change over time in the selling prices received by domestic producers for their output. The prices included in the PPI are from the first commercial transaction for many products and some services. It's often used as a predictor of subsequent retail price changes and as a measure of inflation for the manufacturing sector of the economy.

3. GDP deflator: This is a measure of the price level of all domestically produced final goods and services in an economy. Unlike the CPI and PPI, the GDP deflator is not based on a fixed basket of goods and services. The GDP deflator has the advantage of not being a fixed basket of goods and services, meaning it's not subject to the same substitution bias. The GDP deflator reflects changes in consumption patterns and the introduction of new goods and services.

Each of these indexes measures inflation in a slightly different way, and each has its strengths and weaknesses. Economists and policymakers often look at all three to get a comprehensive view of inflation trends.