If the Consumer Prices Index (CPI) rises at 5 per cent per year, then every individual in the country needs exactly a 5 per cent increase in their income for their standard of living to remain constant.

Question

Quizplus · Accepted Answer

The CPI measures inflation and the cost of living, but it doesn't take into account changes in individual circumstances or preferences. Some individuals may experience higher or lower increases in their cost of living depending on factors such as location, housing, food preferences, and healthcare needs. In addition, a 5 per cent increase in income may not fully offset the impact of inflation on purchasing power, as taxes and other expenses may also rise.

If the Consumer Prices Index (CPI) Rises at 5 Per