The technique used to calculate the CPI implicitly assumes that consumers buy
A)relatively more of goods with relative prices that are increasing.
B)relatively less of goods with relative prices that are decreasing.
C)the same relative quantities of goods as in a base year.
D)goods and services whose quality improves at the rate of growth of real GDP.
E)more computers and CD players and fewer black-and-white TVs.

Question

Quizplus · Accepted Answer

The CPI assumes that consumers buy the same relative quantities of goods as in a base year. This means that the basket of goods and services used to calculate the CPI remains constant and does not change even if there are changes in consumer preferences or spending patterns. As a result, changes in the CPI reflect only changes in the prices of the goods and services in the basket, not changes in the quantities purchased.

The Technique Used to Calculate the CPI Implicitly Assumes That