As a result of the changing variety and quality of goods that the typical consumer purchases each year,many economists argue that the CPI might:
A) have to be abandoned in favor of a better measure of inflation.
B) not be as good a measure of inflation as the GDP deflator is.
C) understate inflation.
D) overstate inflation.

Question

Quizplus · Accepted Answer

The CPI might overstate inflation because it does not fully account for changes in consumer behavior, such as substitution for cheaper alternatives when prices rise, or improvements in product quality.

As a Result of the Changing Variety and Quality of Goods