The index of prices of a given basket of commodities which are bought by the representative consumers is called ?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Consumer Price Index.
To see how the cost of living changes, statisticians take a fixed basket of commodities that a typical, or representative, consumer buys, and compare what the basket costs this year with what it cost in a base year. That ratio, usually in percentage terms, is the Consumer Price Index (CPI); since it follows the prices consumers actually pay, it is the usual measure of the cost of living.
Why the other options are incorrect
Option (2) Wholesale Price Index. — Incorrect. The WPI is built from wholesale prices, the prices at which goods change hands in bulk between producers and traders. It is not based on the basket bought by consumers, and it leaves out services that consumers buy.
Option (3) Index on industrial production — Incorrect. The index of industrial production measures the volume of output of industry. It is an index of production, not of prices.
Option (4) Dollar Price Index — Incorrect. The US Dollar Index measures the value of the US dollar against a basket of other currencies. It is an exchange-rate index, not an index of the prices of goods bought by consumers.
Note: A same/similar question was asked in CUET (UG) in the papers below.
| 2026 | 2025 | 2024 | 2023 | 2022 |
| 13-05 S2 31-05 S1* | 13-05 S1* 14-05 S1* | – | – | – |
* A similar question.
NCERT (2025-26): “2.4 Nominal and Real GDP … There is another way to measure change of prices in an economy which is known as the Consumer Price Index (CPI). This is the index of prices of a given basket of commodities which are bought by the representative consumer. CPI is generally expressed in percentage terms. We have two years under consideration – one is the base year, the other is the current year. We calculate the cost of purchase of a given basket of commodities in the base year. We also calculate the cost of purchase of the same basket in the current year. Then we express the latter as a percentage of the former.…” |