Which of the following is true about the consumer price index?
A)It accounts for people switching to goods whose prices have fallen.
B)It assumes that consumers purchase the same amount of each product in the market basket each month.
C)It frequently updates the price changes of new products added to the market basket,as these have a tendency to fall.
D)It filters out the part of price increases that occurs because of quality improvements in products.

Question

Quizplus · Accepted Answer

The Consumer Price Index (CPI) assumes that consumers purchase the same amount of each product in the market basket each month, which is a fixed basket of goods and services. This assumption is a simplification that does not account for changes in consumer behavior, such as switching to cheaper alternatives or changes in product quality.

Which of the Following Is True About the Consumer Price