Question

The CPI measures the average prices paid by __________ for _________.

A. urban consumers; a fixed basket of consumption goods and services
B. urban consumers; the average basket of goods and services they buy
C. all consumers; housing, transportation, and food
D. everyone who earns an income; the necessities of life

Answer 1

B. urban consumers; the average basket of goods and services they buy

Step-by-step explanation:

• The CPI is an index that measures the weighted average of the price of a basket of goods and services such as the transportation, food and the medical care, etc.

• The items are predetermined on the basket of goods and services, hence is widely used as an economic indicator and measures inflation and effectiveness of governmental policies.