Which of the following assumptions is NOT a problem in using the consumer price index (CPI) to accurately state the rate of inflation?
A) The CPI assumes that people do not substitute goods.
B) The CPI does not account for quality changes.
C) The CPI does not include new products.
D) The CPI does not deal with producer prices.

Question

Quizplus · Accepted Answer

The CPI is specifically designed to measure consumer prices, not producer prices, so this is not a problem related to its accuracy in measuring consumer inflation.

Which of the Following Assumptions Is NOT a Problem in Using