What basket of goods is used to construct the CPI? (1) only food, clothing, transportation, entertainment, and education (2) the goods and services that are typically bought by consumers as determined by government surveys (3) a random sample of all goods and services produced in the economy (4) the least expensive and the most expensive goods and services in each major category of consumer expenditures

The **Consumer Price Index (CPI)** measures the average change over time in the prices paid by urban consumers for a **market basket** of consumer goods and services. To construct this basket, the **Bureau of Labor Statistics (BLS)** conducts extensive surveys to determine the types and quantities of goods and services that are typically purchased by households. This process ensures that the CPI accurately reflects the spending habits of consumers. **Option (2)** accurately describes this methodology: > **(2) the goods and services that are typically bought by consumers as determined by government surveys** The other options are less accurate: - **Option (1)** is too limited, listing only a few categories. - **Option (3)** suggests a random sampling, which doesn't reflect consumer behavior. - **Option (4)** focuses on price extremes within categories, which isn't representative of overall consumer spending. **Answer:** **Option (2): the goods and services that are typically bought by consumers as determined by government surveys**