The CPI overestimates inflation because
A)it often ignores the invention of new goods.
B)it always includes discount stores.
C)it allows substitution from more expensive goods to cheaper goods.
D)all of the above.

Question

Quizplus · Accepted Answer

The CPI (Consumer Price Index) overestimates inflation because it often ignores the invention of new goods, which can make the basket of goods used to calculate CPI less representative over time. New goods can offer better quality or value, leading consumers to shift their purchasing patterns, a change that CPI may not fully capture.

The CPI Overestimates Inflation Because