The consumer price index (CPI):

Question

Quizplus · Accepted Answer

The CPI does not fully adjust for quality changes in goods, which means that it may overstate inflation if the quality of goods improves over time. The other options are incorrect: A) Chained CPI can be constructed, which accounts for changes in consumption patterns over time. C) The CPI is updated periodically but not necessarily whenever new goods are introduced. D) The CPI only partially accounts for substitution by assuming that consumers continue to purchase the same mix of goods even as prices change.

The Consumer Price Index (CPI)