Which of the following is a shortcoming of a fixed market basket type index?
I.It does not reflect consumer responses to changing prices.
II.It excludes new goods and services.
III.It may not completely account for quality changes.

Question

Quizplus · Accepted Answer

A fixed market basket type index has several shortcomings: it does not account for consumer substitution when prices change (I), it often excludes new goods and services that were not part of the original basket (II), and it may not fully adjust for changes in the quality of goods and services over time (III).

Which of the Following Is a Shortcoming of a Fixed