The consumer price index (CPI):
A)is an average of the prices of all consumer goods purchased each year.
B)measures changes in the prices of a market basket of some 600 goods and services purchased by urban consumers.
C)measures prices of goods, but not services since services don't fit into a market basket.
D)is also known as the GDP price index.

Question

Quizplus · Accepted Answer

The CPI measures changes in the prices of a market basket of some 600 goods and services purchased by urban consumers. A is incorrect because the CPI only measures prices of a specific market basket and not all consumer goods. C is incorrect because the CPI does measure services as well as goods. D is incorrect because the GDP price index is a different measure that tracks changes in the prices of all goods and services produced in the economy, not just those purchased by consumers.

The Consumer Price Index (CPI)