Which of the following is true about the consumer price index?
A)It accounts for people switching to goods whose prices have fallen.
B)It assumes that consumers purchase the same amount of each product in the market basket each month.
C)It updates yearly to allow for new products to be added to the market basket.
D)It filters out the part of price increases that occurs because of quality improvements in products.
E)It updates yearly to account for changes in the places where people shop.

Question

Quizplus · Accepted Answer

The Consumer Price Index (CPI) assumes that consumers purchase the same amount of each product in the market basket each month, which is a simplification used to measure inflation by comparing the price changes of this constant basket of goods and services over time.

Which of the Following Is True About the Consumer Price