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Which economic indicator is often referred to as the 'cost of living' index?
GDP
Consumer Price Index (CPI)
Repo Rate
Balance of Payments
Consumer Price Index (CPI)
The Consumer Price Index (CPI) measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. Because it tracks changes in the cost of a representative basket of daily essentials, it is widely utilized as the primary indicator for the cost of living.
The Consumer Price Index (CPI) measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. Because it tracks changes in the cost of a representative basket of daily essentials, it is widely utilized as the primary indicator for the cost of living.
In India, the Consumer Price Index (CPI) is compiled and published monthly by the National Statistical Office (NSO) operating under the Ministry of Statistics and Programme Implementation (MoSPI).
CPI measures retail inflation experienced directly by consumers in the marketplace.
Changes in the CPI directly reflect fluctuations in household expenditures and the cost of living.
The Reserve Bank of India (RBI) utilizes CPI-Combined as the benchmark inflation target for monetary policy decisions.
Option A (GDP) measures the total monetary value of all finished goods and services produced within a country's borders during a specific period.
Option C (Repo Rate) is the interest rate at which the central bank lends money to commercial banks.
Option D (Balance of Payments) is a statement of all transactions made between entities in one country and the rest of the world over a defined period.
B is correct тАФ Consumer Price Index (CPI) directly measures the changing cost of a standard basket of consumer goods and services, earning it the designation of the cost of living index.
In Indian economy exams, questions frequently contrast CPI (retail inflation) with Wholesale Price Index (WPI), noting that the RBI transitioned from WPI to CPI as its primary inflation gauge following the Urjit Patel Committee recommendations.
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