ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -If the Consumer Price Index was 170 in one year and 180 in the next year, then the rate of inflation from one year to the next was approximately: 5.9 percent.

Detailed explanation-2: -To find the CPI in any year, divide the cost of the market basket in year t by the cost of the same market basket in the base year. The CPI in 1984 = $75/$75 x 100 = 100 The CPI is just an index value and it is indexed to 100 in the base year, in this case 1984. So prices have risen by 28% over that 20 year period.

Detailed explanation-3: -The BLS calculates CPI inflation by taking the average weighted cost of a basket of goods in a given month and dividing it by the same basket from the previous month. Prices that make up CPI inflation calculations come from the BLS’ Consumer Expenditure Surveys, which assess what real Americans are buying.

Detailed explanation-4: -The consumer price index (CPI) is a means to measure the weighted average cost of consumer bags of goods and services such as food, medical care, and transportation. It is evaluated by taking a cost change of each product in the prearranged bags of goods and averaging them.