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What does CPI mean in Economics?


Consumer Price Index

The CPI examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care. The CPI is calculated by taking price changes for each item in the predetermined basket of goods and averaging them. The goods are weighted according to their importance. Changes in CPI are used to assess price changes associated with the cost of living.

Unfortunately, the CPI assumes everybody is in the same economic class. Therefore it applies only to the 'average' family. I do not know any average families. Do you?





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