Question : ___________ is a measure of the average prices of a basket of goods and services in an economy.
Option 1: Gross Domestic Product (GDP)
Option 2: Consumer Price Index (CPI)
Option 3: Wholesale Price Index (WPI)
Option 4: Money supply
Correct Answer: Consumer Price Index (CPI)
Solution : The correct answer is (b) Consumer Price Index (CPI).
The Consumer Price Index is a measure of the average prices of a basket of goods and services in an economy. It is used to track and quantify changes in the cost of living and inflation rates over time. The CPI collects price data for various items commonly consumed by households, such as food, housing, transportation, healthcare, education, and other goods and services. By comparing the current CPI with a base period, economists and policymakers can assess the rate of inflation or deflation and make informed decisions regarding monetary policy, fiscal policy, and other economic measures.
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