Question
Which of the following Statements is/are Correct?
I- The CPI captures changes in price level at the consumer level. II- Changes in prices at the producer level are tracked by the Wholesale Price Index (WPI). III- CPI can capture the change in the prices of services which the WPI cannot.Solution
Consumer Price Index or CPI is the measure of changes in the price level of a basket of consumer goods and services bought by households. CPI is a numerical estimation calculated using the rates of a sample of representative objects the prices of which are gathered periodically. The CPI captures changes in price level at the consumer level. Changes in prices at the producer level are tracked by the Wholesale Price Index (WPI). CPI can capture the change in the prices of services which the WPI cannot.
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