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A Quality-Change Bias in the Construction of the CPI Arises

Question 74

Multiple Choice

A quality-change bias in the construction of the CPI arises because


A) new goods and services are routinely introduced and many of them are not incorporated into the market basket that makes up the CPI.
B) big box stores that carry electronic goods routinely run sales to reduce their inventories before stocking new models.
C) prices of most durable goods do not reflect improvements in quality of these goods.
D) quality differences between the goods priced in two different periods cannot be accurately measured and deducted from the accompanying price difference between the goods.

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