The consumer price index reflects:
A)changes in the prices of goods and services typically purchased by consumers.
B)the level of prices for intermediate goods and services purchased by business.
C)the level of prices for raw materials.
D)the prices of all goods and services computed from the ratio of nominal GDP to real GDP.

Question

Quizplus · Accepted Answer

The consumer price index (CPI) is a measure of the average change over time in the prices paid by urban households for a basket of goods and services. It reflects changes in the prices of goods and services that are typically purchased by consumers. Option B is incorrect because the CPI does not include intermediate goods and services purchased by businesses. Option C is incorrect because the CPI does not reflect the level of prices for raw materials. Option D is incorrect because the CPI is not computed from the ratio of nominal GDP to real GDP.

The Consumer Price Index Reflects