Which of the following statements is true of the CPI?
A) It uses the same basket of goods and services as the PPI.
B) The quantities of items in the current year are used for computing the weights for the index.
C) It is an unweighted price index used to measure inflation.
D) It is based on the prices paid by urban consumers for a representative basket of goods and services.

Question

Quizplus · Accepted Answer

The CPI is based on the prices paid by urban consumers for a representative basket of goods and services. Option A is incorrect because the CPI and PPI use different baskets of goods and services. Option B is incorrect because the base year quantities are used for computing the weights for the index. Option C is incorrect because the CPI is a weighted price index used to measure inflation.

Which of the Following Statements Is True of the CPI