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11. How do economists use a basket of goods and services to measure the price level?

ECON QUISTIOn

User Vicsz
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Economists use a basket of goods and services to calculate the Consumer Price Index (CPI), which measures changes in the prices of these items over time. The basket includes items that an average consumer regularly purchases, such as food, clothing, housing, and entertainment. The CPI is compared to a base year value of 100 to track inflation and changes in the cost of living. This information helps economists make economic policy decisions, such as setting interest rates and adjusting government spending.

User Dan Nguyen
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