Question

2. Explain the uses of consumer price index

Answer 1

Answer:

It gives an idea of the cost of living. Inflation is measured using CPI. The percentage change in this index over a period of time gives the amount of inflation over that specific period, i.e. the increase in prices of a representative basket of goods consumed.

Answer 2

Explanation:

The Consumer Price Index (CPI) is a measure of the aggregate price level in an economy. ... The market basket used to compute the Consumer Price Index is representative of the consumption expenditure within the economy and is the weighted average of the prices of goods and services.