If the CPI doesn't measure product quality improvements,the CPI tends to
A)Understate the inflation rate.
B)Overstate the inflation rate.
C)Understate economic growth.
D)Be artificially low.

Question

Quizplus · Accepted Answer

When the Consumer Price Index (CPI) doesn't measure product quality improvements, it tends to overstate the inflation rate because it does not account for the increased value consumers receive from improved products, thus making it seem like prices are rising more than they actually are in terms of value received.

If the CPI Doesn't Measure Product Quality Improvements,the CPI Tends