In calculating the CPI,a fixed basket of goods and services is used.The quantities of the goods and services in the fixed basket are determined by
A)surveying consumers.
B)surveying sellers of the goods and services.
C)working backward from the rate of inflation to arrive at imputed values for those quantities.
D)arbitrary choices made by federal government employees.

Question

Quizplus · Accepted Answer

The quantities of goods and services in the fixed basket are determined by surveying consumers. In order to accurately calculate the CPI, the basket needs to represent what the average consumer purchases. Therefore, surveying consumers is the best way to determine the items and quantities in the fixed basket.

In Calculating the CPI,a Fixed Basket of Goods and Services