Because the CPI is based on a fixed basket of goods,the introduction of new goods and services in the economy causes the CPI to overestimate the cost of living.This is so because
A)new goods and services are always of higher quality than existing goods and services.
B)new goods and services cost less than existing goods and services.
C)new goods and services cost more than existing goods and services.
D)when a new good is introduced,it gives consumers greater choice,thus reducing the amount they must spend to maintain their standard of living.

Question

Quizplus · Accepted Answer

The introduction of new goods provides consumers with more choices, potentially allowing them to maintain their standard of living at a lower cost, which the fixed basket of the CPI does not account for, leading to an overestimation of the cost of living.

Because the CPI Is Based on a Fixed Basket of Goods,the