The chained consumer price index (CPI) is a/an:
A) arithmetic average of the prices of all goods produced in gross domestic product (GDP).
B) arithmetic average of the prices of all consumer goods produced in GDP.
C) geometric average of the prices of the typical consumer market basket.
D) geometric average of the prices of all goods produced in GDP.
E) process of linking the prices of older goods that are no longer produced (such as cassette tapes and eight-track tapes) with "modern" goods (such as MP3 and MP4 players) in a process called chaining.

Question

Quizplus · Accepted Answer

The chained consumer price index (CPI) is a measure of inflation that reflects changes in the prices of goods and services consumed by urban households. It is a geometric average of the prices of the typical consumer market basket, which is updated periodically to reflect changes in consumer spending habits. The process of "chaining" refers to the practice of linking together different market baskets over time, to capture changes in the composition of goods and services consumed as households respond to changes in relative prices.

The Chained Consumer Price Index (CPI) Is A/an