Question
What does an increase in the Consumer Price Index (CPI)
signify?Statements:(I) A rise in retail prices(II) An increase in consumers' purchasing power(III) Inflationary trends in the economySolution
The Consumer Price Index (CPI) is a key economic indicator that tracks changes in the overall price level of a standard basket of goods and services consumed by households. A rise in the CPI reflects increasing retail prices, which indicates inflation in the economy. As prices increase, the purchasing power of consumers generally declines, not rises.Hence, statements I and III are correct.
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