Why is the cpi calculated for urban areas only?
Answers
Answer:
Cpi means consumer price index. To calculate it you need to have some goods whose price one can compare over a period of time. Hence there is a basket of goods defined. ... Rural may spend more on food and related products while urban may spend more on consumer goods like buying a washing machine.
Answer:
Consumer price is usually calculated for both urban areas and rural areas.
Consumer price index measures the changes occurred in the price level of the goods and services over the period of time. When we are comparing the CPI for urban areas and for rural areas, we observed that consumer price index for urban areas is comparatively better representative measure of the common people because most of the people are live in urban areas. Approximately, 90 percent of the total population lived in urban areas.
CPI is also used to calculate inflation and also represents the effectiveness of the government fiscal and monetary policy.