Question

Which of the following statements is correct with regard to Consumer Price Index?
1. It measures the average change in the sale price of goods and services either as they leave the place of production or as they enter the place of production.
2. It is used to monitor changes in the cost of living over time.
3. It is used to monitor the cost of the goods and services bought by producers and firms.
4. It reflects the price of all the goods and services produced domestically.

Answer 1

Correct Answer - Option 2 : It is used to monitor changes in the cost of living over time.

The correct answer is It is used to monitor changes in the cost of living over time.

• The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care.
• It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them.
• The current Consumer Price Index of India is 156.60.
•  A CPI is a statistical estimate constructed using the prices of a sample of representative items whose prices are collected periodically. 

• Consumer Price Index in India is published monthly by the Central Statistical Organization (CSO).
• The Headquarters of the Central Statistical Organization is in New Delhi.
• The Central Statistical Organization was established in 1951.
• The government announced that the National Sample Survey Office (NSSO) will be merged with the Central Statistics Office to form the National Statistical Office (NSO).