What does CPI stand for and measure?

What does CPI stand for and measure?

• A. A measure of wage growth.
• B. An index of the cost of all goods and services to a typical consumer.
• C. The total market value of a country’s exports.
• D. The average age of consumers.

Answer: (B)

CPI measures how the overall price level for goods and services bought by households changes over time. It stands for Consumer Price Index and tracks the cost of a fixed basket of goods and services that a typical household buys. When prices rise, the CPI goes up, signaling inflation and a higher cost of living. The description that it is an index of the cost of a representative basket of goods and services to a typical consumer is the best fit. It isn’t about wage growth, exports, or the age of consumers.

CPI measures how the overall price level for goods and services bought by households changes over time. It stands for Consumer Price Index and tracks the cost of a fixed basket of goods and services that a typical household buys. When prices rise, the CPI goes up, signaling inflation and a higher cost of living.

The description that it is an index of the cost of a representative basket of goods and services to a typical consumer is the best fit. It isn’t about wage growth, exports, or the age of consumers.