Causes and Impact of Inflation Quick Check

Question

4 of 54 of 5 Items
Question
The Consumer Price Index of any given year provides _____.(1 point)
Responses

the relative price of a basket of consumer goods as compared to base year prices
the relative price of a basket of consumer goods as compared to base year prices

the nominal price of all consumer goods in the economy
the nominal price of all consumer goods in the economy

the relative price of all consumer goods in the economy as compared to base year prices
the relative price of all consumer goods in the economy as compared to base year prices

the nominal price of a basket of consumer goods

Answer 1

The correct response is:

the relative price of a basket of consumer goods as compared to base year prices.

The Consumer Price Index (CPI) measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services, and it compares these prices to those in a base year.