Which one of the following statements is true of the Consumer Price Index?
A) It does not take account of the price of imported goods and services.
B) It measures changes in prices of a fixed basket of goods.
C) It does not take into account the price of used goods.
D) It understates the true rate of inflation.

Question

Quizplus · Accepted Answer

The Consumer Price Index (CPI) measures changes in the prices of a fixed basket of goods and services, meaning that the items included in the basket are constant over time. This helps to track changes in the cost of living for consumers and the inflation rate. Option A is incorrect because the CPI does take into account the prices of imported goods and services. Option C is also incorrect because the CPI includes the prices of both new and used goods. Option D is subjective and open to debate.

Which One of the Following Statements Is True of the Consumer