What is used in measuring the average level of prices in an economy?

Question

this is an economics question and i will like to know if it is the cosumer price index or inflation

Answer 1

CPI Consumer Price Index.

1. Household expenditure survey- seeks to measure what people spend their money

on. And therefore get a typical basket of goods.

2. This basket of goods gives a relative importance to each different item. E.g. if

housing increased by 10% this would have more effect than an increase in radios

3. The basket of goods is updated each year to take into account changes in

expenditure

4. Every month changes in prices of goods and services are monitored and combined

into a single figure with using the weights in the basket.

Answer 2

A consumer price index (CPI) is an index number measuring the average price of consumer goods and services purchased by households. It is one of several price indices calculated by national statistical agencies. The percent change in the CPI is a measure of inflation. The CPI can be used to index (i.e., adjust for the effects of inflation) wages, salaries, pensions, or regulated or contracted prices. The CPI is, along with the population census and the National Income and Product Accounts, one of the most closely watched national economic statistics.