Improvements in the quality of consumer goods and services over time
A) cause inflation as measured by the CPI to overstate the actual inflation rate
B) cause inflation as measured by the CPI to understate the actual inflation rate
C) are accounted for in the CPI
D) are insignificant and thus would not affect the CPI even if accounted for
E) improve the accuracy and consistency of the market basket

Question

Quizplus · Accepted Answer

The CPI may overstate inflation because it doesn't fully account for improvements in quality, meaning consumers get more value for the same price, which isn't reflected as a price decrease.

Improvements in the Quality of Consumer Goods and Services Over