HISET Social Studies Practice

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What does the Consumer Price Index measure?

The measure of national unemployment rates
The change in tax revenues over time
The change in the cost of buying a fixed basket of goods and services
The levels of savings among consumers

The correct answer is: The change in the cost of buying a fixed basket of goods and services

The Consumer Price Index (CPI) is specifically designed to measure the change in the cost of purchasing a fixed basket of goods and services over time. This index reflects how prices are changing for everyday items that consumers buy, such as food, housing, clothing, and transportation. By tracking these price changes, CPI provides valuable information about inflation and the purchasing power of consumers, making it a key economic indicator. While national unemployment rates, tax revenues, and levels of savings are important economic factors, they do not directly relate to the specific role of the CPI, which focuses solely on consumer prices and the cost of living.