The CPI may be an inaccurate measure of changes in the price level because
A)consumers rarely switch to less expensive products when the price of a particular good increases.
B)it is a changing quantity index.
C)changes in product quality are not taken into account.
D)the market basket of goods was determined arbitrarily by the government without conducting surveys of spending patterns.

Question

Quizplus · Accepted Answer

The CPI does not take into account changes in product quality. If the quality of a good or service improves, but the price remains the same, the CPI will not reflect this improvement. Conversely, if the quality of a good or service declines, but the price remains the same, the CPI will not reflect this decline. This can lead to an inaccurate measurement of changes in the price level.

The CPI May Be an Inaccurate Measure of Changes in the Price