The Consumer Price Index (CPI)differs from a chain-weighted price index in that the CPI
A) requires calculation of GDP, while the chain-weighted index does not.
B) measures the costs of a typical fixed basket of goods over time, while the chain-weighted index does not.
C) allows for the goods consumed in an economy to change over time, while the chain-weighted index does not.
D) compares the prices of all goods in one year to the prices of all goods in other years.

Question

Quizplus · Accepted Answer

The CPI measures the costs of a typical fixed basket of goods over time, while the chain-weighted index takes into account changes in the composition of goods and services over time. The other options presented are not accurate descriptions of the differences between these two types of price indexes.

The Consumer Price Index (CPI)differs from a Chain-Weighted Price Index