Which of the following is not correct with respect to Consumer Price Index?

Question

Question

It measures the average change in prices of a basket of goods
It is the most widely used measure of inflation
It cover professionals, self-employed, poor, unemployed and retired people in the country
CPI-U is the Consumer Price Index for Rural Consumers.

Answer 1

The correct answer is CPI-U is the Consumer Price Index for Rural Consumers.

Key Points

The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, which includes transportation, food, and medical care.
It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them.
Changes in the CPI are used to assess price changes associated with the cost of living. The CPI is a statistic for identifying periods of inflation or deflation.
It does not include things like savings and investments, and can often exclude spending by foreign visitors.
The CPI statistics incorporate professionals, self-employed, poor, unemployed, and retired people in the country but excludes non-metro or rural populations, farm families, armed forces, people serving in prison, and those in mental hospitals.
CPI-W measures the Consumer Price Index for Urban Wage Earners and Clerical Workers while the CPI-U is the Consumer Price Index for Urban Consumers.