The Consumer Price Index (CPI) is:
A) an example of an index that uses variable expenditure weights.
B) a fixed-expenditure-weight index used to measure changes in the GDP Deflator.
C) a fixed-expenditure weight-index used to measure changes in purchasing power for households.
D) the least commonly used measure of inflation.

Question

Quizplus · Accepted Answer

The Consumer Price Index (CPI) is a fixed-expenditure weight-index used to measure changes in purchasing power for households. It tracks the changes in prices of a predetermined basket of goods and services that are typically purchased by consumers on a regular basis. This measure is widely used as an indicator of inflation, as it reflects changes in the cost of living for individuals and households.

The Consumer Price Index (CPI) Is