ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A consumer price index (CPI) is usually calculated as a weighted average of the price change of the goods and services covered by the index. 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.

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 U.S. CPI basket includes a 33.3% weighting for shelter costs derived mostly from rents and owners’ equivalent.

Detailed explanation-3: -Specifically, the CPI measures the average change in price over time of a market basket of consumer goods and services. The market basket includes everything from food items to automobiles to rent.