Question

To measure consumer price index (CPI) which of the following years are taken into consideration? (A) Current Year.
(B) Preceding Year.
(C) Base Year.
(D) Succeeding Year.

• A. (A), (B) and (D) only
• B. (A) and (C) only
• C. (A), (B) and (C) only
• D. (B), (C) and (D) only

Hint:

Always remember: CPI = Current Year Prices / Base Year Prices × 100. Only these two years matter.

Answer 1

The Correct Option is B

Step 1: Recall CPI formula.
\[CPI = \frac{\text{Cost of basket in Current Year}}{\text{Cost of basket in Base Year}} \times 100\] Step 2: Explanation.
- CPI necessitates the Current Year for observing present prices.
- The Base Year serves as the reference point for CPI.
- Neither the preceding nor succeeding year is involved in CPI calculation.
Step 3: Verify options.
Options (A) and (C) are the sole correct selections.
Final Answer: \[\boxed{\text{CPI is measured using Current Year and Base Year.}}\]