Question

The consumer price index (CPI) is a weighted average of the prices of ________?

1) Goods and services purchased by consumers
2) Goods and services produced by manufacturers
3) Goods and services imported from other countries
4) Goods and services sold in the stock market

Answer 1

The Consumer Price Index (CPI) is a measure based on the weighted average prices of goods and services that the average consumer purchases, which is an indicator of inflation.

Step-by-step explanation:

The Consumer Price Index (CPI) is a weighted average of the prices of goods and services purchased by consumers. This index is calculated by taking the prices of individual products, comprising a 'basket', and combining them using weights based on the quantities of the products consumers buy. The CPI also accounts for factors like substitution between goods and quality improvements. It represents the average change over time in prices paid by urban consumers and is broken down into various categories, including Food and Beverages, Housing, and several others that reflect the typical consumer's expenses.