Which of the following is NOT true?
A) The consumer price index does not account for product substitutions well.
B) The consumer price index does not account for all goods and services consumed by households.
C) The consumer price index is a cost-of-living index.
D) The consumer price index measures inflation.

Question

Quizplus · Accepted Answer

The consumer price index (CPI) is not a true cost-of-living index because it does not account for changes in consumer behavior, such as substitutions between products when prices change. It primarily measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.

Which of the Following Is NOT True