Joe Kowalski invents a new product,and this new product becomes cheaper over time.This can be problematic because:
A) the consumer price index (CPI) will include Joe's new product immediately if it is a consumer good, but as a consumer good, it will not be included in the gross domestic product (GDP) deflator.
B) the percent change in the CPI will be distorted, but the change in the GDP deflator will not be, regardless of whether the product is a consumer good or a producer good.
C) it is unlikely the CPI will include Joe's new product immediately, even if it is a consumer good.
D) money illusion will cause consumers to buy more of this good than the CPI would otherwise reflect.
E) this good might be produced in a geographic location that is not included in the CPI.

Question

Quizplus · Accepted Answer

New products are often not immediately included in the CPI, which can lead to a delay in reflecting their price changes in the index.

Joe Kowalski Invents a New Product,and This New Product Becomes