Question

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.

Answer 1

Answer:

Answer is option A i.e. surveying consumers.

Explanation:

In the calculation of CPI, the quantities of the goods and services in the fixed basket are determined after conducting the various household expenditure survey of the consumers who actually use the goods and services. Therefore, we can say that these quantities are determined after surveying the consumers.