Question

The Consumer Price Index (CPI): A. Is a fixed-expenditure weight-index used to measure changes in purchasing power for households B.Is an example of an index that uses variable expenditure weights

Answer 1

The correct answer is A

Step-by-step explanation:

CPI termed or stand for Consumer Price Index, which is a measure that evaluate the weighted average of the prices of the basket of the goods and the services of the consumer like the medical care, transportation and food.

CPI is computed or measured by taking the changes in the price for each and every item in the pre- determined basket of the goods and then take the average of them.

So, CPI is the fixed weight index, used to evaluate the changes in the purchasing power for the households.