The CPI is determined by computing:

A. an average of prices of all goods and services.
B. the price of a basket of goods and services that changes every year, relative to the same basket in a base year.
C. the price of a fixed basket of goods and services, relative to the price of the same basket in a base year.
D. nominal GDP relative to real GDP.


Ans: C. the price of a fixed basket of goods and services, relative to the price of the same basket in a base year.

Economics

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