Improvements in the quality of consumer goods and services over time
A)cause the CPI to overstate actual inflation.
B)cause the CPI to understate actual inflation.
C)are accounted for in the CPI.
D)are insignificant and thus would not affect the CPI even if accounted for.

Question

Quizplus · Accepted Answer

The Consumer Price Index (CPI) may overstate actual inflation because it does not fully account for improvements in the quality of goods and services, which can make them more valuable even if their prices increase.

Improvements in the Quality of Consumer Goods and Services Over