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With reference to Consumer Price Index (CPI), consider the following statements:
1. The CPI takes into account the prices of goods only.
2. It includes the prices of imported goods.
Which of the statements given above is/are correct?
1. The CPI takes into account the prices of goods only.
2. It includes the prices of imported goods.
Which of the statements given above is/are correct?
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
Correct answer is option 'B'. Can you explain this answer?
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Most Upvoted Answer
With reference to Consumer Price Index(CPI), consider the following st...
- Consumer Price Index is a measure of change in retail prices of goods and services consumed by defined population group in a given area with reference to a base year. Hence statement 1 is not correct.
- This basket of goods and services represents the level of living or the utility derived by the consumers at given levels of their income, prices and tastes.
- The CPI includes the prices of goods consumed by representative customers, hence it includes prices of imported goods. Hence statement 2 is correct.
- The consumer price index measures change only in one of the factors i.e. prices. This index is an important economic indicator and is widely considered as a barometer of inflation, a tool for monitoring price stability and as a deflator in national accounts.
- Consumer price index is used as a measure of inflation in around 157 countries. The dearness allowance of Government employees and wage contracts between labour and employer is based on this index.
- In 2011 the CSO brought out a revised CPI, which was CPI (Urban), CPI (Rural) and CPI (Urban +Rural) with 2010 as the base price. CSO revised the base year of this newly set up index to 2012 in January 2015.
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With reference to Consumer Price Index(CPI), consider the following st...
Explanation:
Statement 1: The CPI takes into account the prices of goods only.
- The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care.
- It includes a wide variety of goods and services that consumers typically purchase, not just goods.
Statement 2: It includes the prices of imported goods.
- The CPI does include the prices of imported goods. Imported goods are included in the basket of goods and services used to calculate the index.
- The prices of both domestic and imported goods and services are taken into consideration when calculating the CPI.
Therefore, statement 2 is correct, while statement 1 is incorrect. The correct answer is option 'B' - 2 only.
Statement 1: The CPI takes into account the prices of goods only.
- The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care.
- It includes a wide variety of goods and services that consumers typically purchase, not just goods.
Statement 2: It includes the prices of imported goods.
- The CPI does include the prices of imported goods. Imported goods are included in the basket of goods and services used to calculate the index.
- The prices of both domestic and imported goods and services are taken into consideration when calculating the CPI.
Therefore, statement 2 is correct, while statement 1 is incorrect. The correct answer is option 'B' - 2 only.
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With reference to Consumer Price Index(CPI), consider the following statements:1. The CPI takes into account the prices ofgoods only.2. It includes the prices of imported goods.Which of the statements given above is/arecorrect?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'B'. Can you explain this answer?
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