i. The CPI serves only one major function: as an economic indicator of the rate of inflation. ii. To construct a special-purpose index designed to measure general business activity, the weights are based on the judgments of the statistician and assigned to each series.
iii. The Consumer Price Index measures the change in prices of a fixed market basket of goods and services from one period to another.
A) (i), (ii), and (iii) are all correct statements.
B) (i) and (ii) are correct statements but not (iii).
C) (i) and (iii) are correct statements but not (ii).
D) (ii) and (iii) are correct statements but not (i).
E) (i), (ii), and (iii) are all false statements.

Question

Quizplus · Accepted Answer

- Statement (i) is incorrect because the CPI has multiple functions beyond serving as an economic indicator of inflation; it is also used for indexing social security and other benefits, and for wage negotiation, among other purposes.- Statement (ii) is correct as special-purpose indices can indeed use weights based on the judgments of statisticians to measure various aspects of business activity.- Statement (iii) is correct as the CPI does measure the change in prices of a fixed market basket of goods and services over time, which is a fundamental aspect of how it tracks inflation.

I the CPI Serves Only One Major Function: as an Economic