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CPI tries to directly show: a) The Macro quantity b) The Macro price c) The 'Real' value of a...

Question:

CPI tries to directly show:

a) The Macro quantity

b) The Macro price

c) The 'Real' value of a good

d) The price adjusted factor

Consumer Price Index:

The consumer price index (CPI) is a measure of aggregate price level in an economy. The index computes expenditure weighted average price of goods in a basket. The basket of goods are chosen such that they represent the consumption patterns of an average household in the economy.

Answer and Explanation:

The answer is b).

The consumer price index (CPI) is a index that tracks the overall price level in an economy. It shows Macro price in the sense that CPI indicates the aggregate price level, instead of the price of a specific good, or a small set of goods. This is done by calculating the average price of goods in a basket that is constructed to be representative of average household consumption patterns.


Learn more about this topic:

The GDP Deflator and Consumer Price Index

from Economics 102: Macroeconomics

Chapter 5 / Lesson 2
36K

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