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CPI and inflation. Some CPI questions for you - what is the CPI? How is the...

CPI and inflation. Some CPI questions for you - what is the CPI? How is the CPI used? Whose buying habits does the CPI reflect? Is the CPI a cost-of-living index? Does the CPI measure my experience with price changes? How are CPI prices collected and reviewed? How do I read or interpret an index? Is the CPI the best measure of inflation? Please provide detailed answers.

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Answer #1

Answer :CPI = Consumer Price Index.

CPI is a measurement of consumer spending which shows the current year cost over the base year cost for a basket of goods.

CPI is used to measure the inflation rate. The formula of inflation rate is [ (CPI2 - CPI1) / CPI1] × 100

Where CPI2 is the current year cost and

CPI1 is the previous year cost on a good basket.

CPI reflects the buying habit of consumers.

No, CPI is not a cost - of - living standard index. Because CPI does not include all types of living cost and sometimes CPI collected data become wrong. Cost of living standard means the person's total cost for a particular time period by which we can compare the living standard of people in urban and rural areas.

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