Recent changes in methods used to compute the CPI have made the
A)upward bias in the CPI inflation rate more severe than it used to be.
B)upward bias in the CPI inflation rate less severe than it used to be.
C)downward bias in the CPI inflation rate more severe than it used to be.
D)downward bias in the CPI inflation rate less severe than it used to be.

Question

Quizplus · Accepted Answer

Recent changes in methods used to compute the CPI, such as the use of geometric mean instead of arithmetic mean and the introduction of quality adjustments, have reduced the upward bias in the CPI inflation rate. This is because the new methods take into account changes in quality and substitutions made by consumers, which were not fully accounted for in the old methods.

Recent Changes in Methods Used to Compute the CPI Have