ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The Consumer Price Index (CPI) is a measure of the aggregate price level in an economy. The CPI consists of a bundle of commonly purchased goods and services. The CPI measures the changes in the purchasing power of a country’s currency, and the price level of a basket of goods and services.

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: -A market basket is a selected mix of goods and services that tracks the performance of a specific market or segment. A popular market basket is the Consumer Price Index (CPI), which provides an estimate for inflation based on the average change of price paid for a specific basket of goods and services over time.

Detailed explanation-4: -The CPI, run by the Bureau of Labor Statistics, measures more than 200 categories of items arranged into eight major groups, including: food and beverages, housing, apparel, transportation, medical care, recreation, education and communication, and other goods and services.

Detailed explanation-5: -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.