The technique currently used to calculate the CPI implicitly assumes that over time consumers buy
A) goods and services whose quality improves at the rate of growth of real income.
B) relatively more of goods whose relative prices are rising.
C) relatively less of goods whose relative prices are rising.
D) the same relative quantities of goods as in a base year.

Question

Quizplus · Accepted Answer

The technique used to calculate the CPI is based on fixed weights, meaning that the same relative quantities of goods as in a base year are used to calculate the index. This assumes that consumers are buying the same basket of goods over time regardless of changes in relative prices or quality improvements.

The Technique Currently Used to Calculate the CPI Implicitly Assumes