The value of the consumer price index (CPI) is best described as:
A) the current year prices to base year prices, holding the market basket content constant.
B) the current year prices to base year prices, including changes in the content of the market basket.
C) the base year prices to current year prices, holding the market basket content constant.
D) the base year prices to current year prices, including changes in the content of the market basket.
E) the current year quantity to base year quantity, including changes in the prices of the market basket.

Question

Quizplus · Accepted Answer

The value of the consumer price index (CPI) is a measure of the average price of a basket of goods and services relative to a base year. The CPI compares the cost of the same basket of goods and services in the current year to the cost of the same basket in the base year. The value of the CPI is based on the prices of goods and services in the current year and the base year, but the market basket content is held constant. Therefore, the answer is A, the current year prices to base year prices, holding the market basket content constant.

The Value of the Consumer Price Index (CPI) Is Best