ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The CPI represents all goods and services purchased for consumption by the reference population (U or W).

Detailed explanation-2: -In its simplest form, adding the price of each stock in the index and dividing by the total number of companies determines the index’s value. A stock with a higher price will be given more weight than a stock with a lower price and will thus have a greater influence on the index’s performance.

Detailed explanation-3: -Inflation is the rate of increase in prices over a given period of time. Inflation is typically a broad measure, such as the overall increase in prices or the increase in the cost of living in a country.

Detailed explanation-4: -The weights are meant to reflect the relative importance of the goods and services as measured by their shares in the total consumption of households. The weight attached to each good or service determines the impact that its price change will have on the overall index.