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Questions and Answers
What does the Consumer Price Index (CPI) measure?
In the context of CPI, what is the 'COBG'?
Which step is involved in constructing the CPI?
What is the purpose of gathering prices of goods in the basket for CPI calculation?
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What does the CPI formula aim to determine?
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What information is needed to calculate CPI using the formula?
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What does the Consumer Price Index (CPI) represent for a specific year?
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Why is it important to identify the basket of goods for CPI calculation?
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What is the purpose of finding the COBG in the base year for CPI calculation?
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What does 'CPI' stand for?
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Study Notes
Consumer Price Index (CPI)
- Measures the average change in prices of a basket of goods and services purchased by households
- 'COBG' stands for 'Cost of Basket of Goods', which is the total cost of the goods and services in the basket
Constructing the CPI
- Involved steps include: selecting the basket of goods, gathering prices of goods in the basket, finding the cost of the basket of goods (COBG) in the base year, and calculating the CPI using the formula
Calculating the CPI
- Purpose of gathering prices of goods in the basket is to find the COBG in the base year
- Formula aims to determine the ratio of the current year's COBG to the base year's COBG
- Information needed to calculate CPI using the formula includes: prices of goods in the basket, quantity of each good, and COBG in the base year
Importance of CPI
- Represents the average change in prices of a basket of goods and services purchased by households for a specific year
- Identifying the basket of goods is important to understand the average change in prices
- Finding the COBG in the base year is crucial to calculate the CPI
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Description
Test your knowledge about the percentage change in costs of raising a child in the UK from 2012 to 2013. This quiz is based on the information provided regarding the rising costs of education, childcare, food, and the total cost of raising a child in the UK.
