Question

First task in calculating the consumer price index is to decide on a basket of goods that is represenative of the purchases of the average household. we do this by using the consumer expenditure survey, a national survey of about 7,000 households, which provides a) Choosing the base year for calculation b) Determining the weighting of various items in the basket c) Conducting a national survey of about 7,000 households d) Collecting price data for the selected goods and services e) Calculating the price index for the selected items

Answer 1

The subject of this question is Social Studies.

Step-by-step explanation:

The subject of this question is Social Studies.

In order to calculate the Consumer Price Index, the U.S. Bureau of Labor Statistics (BLS) begins by determining a basket of goods that represents average household purchases using the Consumer Expenditure Survey. This national survey of about 7,000 households provides detailed insights into spending habits. Consumer expenditures are then divided into eight primary categories, which are subdivided into over 200 individual item categories.

BLS statisticians then calculate the Consumer Price Index by taking prices of 80,000 individual items and weighing them according to purchase quantities. They account for shifts in consumer preference (substitution between goods) and improvements in product quality. These price indices for the 200 item categories are combined into an overall Consumer Price Index.

The major categories used for determining the basket of goods include: Food and beverages, Housing, Apparel, Transportation, and Medical Care. The reference period that BLS currently uses for CPI calculation is 1982-1984. This method ensures that the CPI accurately represents changes in the cost of living, or the cost to maintain a certain standard of living.

Learn more about Social Studies