Because the CPI is based on a fixed basket of goods, the introduction of new goods and services in the economy causes the CPI to overestimate the cost of living. Why is this?
A) because new goods and services are always of higher quality than existing goods and services
B) because new goods and services cost less than existing goods and services
C) because new goods and services cost more than existing goods and services
D) because when a new good is introduced, it gives consumers greater choice, thus reducing the amount they must spend to maintain their standard of living
Correct Answer:
Verified
Q62: When the quality of a good deteriorates,
Q73: When the quality of a good improves,
Q76: Suppose that dairy products have risen in
Q77: Why are measurement problems in the consumer
Q78: What do economists believe about the bias
Q80: What does the GDP deflator reflect?
A) the
Q80: Suppose that in 2010, OPEC succeeds in
Q81: Which of the following best describes the
Q82: Suppose that Canadian mining companies purchase German-made
Q83: Which of the following is an important
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents