The base period for CPI calculations is generally 1982-84.In 2005,50% of households accessed the Internet through a broadband connection that would not have existed in the 1980s.This potential for bias in the CPI is referred to as ________ bias and results in ________.
A)outlet bias; the CPI underestimating the true change in the cost of living
B)new product; the CPI overestimating the true change in the cost of living
C)outlet bias; the CPI overestimating the true change in the cost of living
D)net product; the CPI underestimating the true change in the cost of living

Question

Quizplus · Accepted Answer

The introduction of new products like broadband internet, which did not exist in the base period, can lead to the CPI overestimating the true change in the cost of living because it does not immediately account for the value and utility of new products.

The Base Period for CPI Calculations Is Generally 1982-84