ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The basket of goods, ranging from meat and poultry prices to the cost of household insurance, gives a representative snapshot of how changes in prices are affecting family budgets. The figures can be collected monthly, which would of course be impossible with a list of all prices.

Detailed explanation-2: -A basket of goods represents consumer spending and is used to track changes in the prices of consumer goods and services over time. The Bureau of Labor Statistics tracks 94, 000 prices monthly to assess inflation for more than 200 categories of products and services.

Detailed explanation-3: -The “shopping baskets” of items used in compiling the various measures of consumer price inflation are reviewed annually. The items in the baskets change so that the measures are up to date and representative of consumer spending patterns.

Detailed explanation-4: -The CPI is based on a fixed basket of goods and services, which represents the average Canadian household’s spending habits. The CPI measures the average change in retail prices encountered by all consumers in Canada.