ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -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.

Detailed explanation-2: -Note: CPI for Agricultural and Rural labourers on base 1986-87=100 is a weighted average of 20 constituent state indices and it measures the extent of change in the retail prices of goods and services consumed by the agricultural and rural labourers as compared with the base period viz ‘86-87.

Detailed explanation-3: -The Consumer Price Index (CPI) in year 1 was 120 and in year 2 was 150. Inflation is the rise in the price level. The inflation between year 1 and year 2 is calculated below. Hence, the inflation rate between year 1 and year 2 is 25%.

Detailed explanation-4: -Included within these major groups are various government-charged user fees, such as water and sewerage charges, auto registration fees, and vehicle tolls. In addition, the CPI includes taxes (such as sales and excise taxes) that are directly associated with the prices of specific goods and services.