Question
_____________ measures changes in the price level of
market basket of consumer goods and services purchased by households.Solution
A consumer price index (CPI) measures changes in the price level of market basket of consumer goods and services purchased by households. The annual percentage change in a CPI is used as a measure of inflation. A CPI can be used to index (i.e., adjust for the effect of inflation) the real value of wages, salaries, pensions, for regulating prices and for deflating monetary magnitudes to show changes in real values. In most countries, the CPI, along with the population census, is one of the most closely watched national economic statistics.
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