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    Question

    Consider the following statements regarding the Consumer Price Index (CPI):

    1.CPI is prepared by the Office of Economic Advisor under the Ministry of Commerce and Industry.

    2.It gives the highest weightage to manufacturing commodities.

    3.CPI includes services like housing and education.

    4.CPI includes goods purchased by businesses.

    How many statement/s given above is/are not correct?

    A Only one Correct Answer Incorrect Answer
    B Only two Correct Answer Incorrect Answer
    C Only three Correct Answer Incorrect Answer
    D Only four Correct Answer Incorrect Answer

    Solution

    Consumer Price Index for Industrial Workers for July, 2023 increased by 3.3 points and stood at 139.7. The CPI is computed by averaging the prices of goods and services in a basket based on their share of household spending.  It is prepared by the National Statistics Office(NSO)which works under the Ministry of Statistics and Programme Implementation. WPI gives high weightage to manufacturing commodities (around 63%), whereas the CPI gives high weightage to food items and other primary products (57%).  Services like housing, education, recreation are covered in CPI basket along with the goods. In WPI, more weightage is given to manufactured goods, while in CPI, more weightage is given to food items. WPI includes goods that businesses and consumers purchase but does not include services. CPI does not include those purchased by businesses.

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