1
Question
Q. Consider the following statements related to the Consumer Price Index(CPI).
Which of the above statements is/are correct?
Q. Consider the following statements related to the Consumer Price Index(CPI).
Which of the above statements is/are correct?
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Solution
The correct option is C Both 1 and 2
Explanation:
Statement 1 is correct: Consumer Price Index or CPI is the measure of changes in the price level of a basket of consumer goods and services bought by households. The index has different weights attached to different items in the basket. Food and beverages have the highest weight at 45.86%.
Statement 2 is correct: The base year is often used for comparison while assessing key indices. The change in the base year often captures the change in the structures of the economy. In the case of CPI, the base year was initially fixed at 2010 but again changed to 2012.
Explanation:
Statement 1 is correct: Consumer Price Index or CPI is the measure of changes in the price level of a basket of consumer goods and services bought by households. The index has different weights attached to different items in the basket. Food and beverages have the highest weight at 45.86%.
Statement 2 is correct: The base year is often used for comparison while assessing key indices. The change in the base year often captures the change in the structures of the economy. In the case of CPI, the base year was initially fixed at 2010 but again changed to 2012.
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