A reason given why the CPI overstates the cost of living is it

Question

Quizplus · Accepted Answer

The reason given why the CPI overstates the cost of living is that it updates the market basket infrequently, thereby missing the steep price decline in the early adoption period. This means that the CPI may be using outdated prices for goods and services, which makes it overstate the actual cost of living. Option A is incorrect because the CPI measures the effects of inflation on all consumers, not just the poor. Option B is incorrect because the CPI does attempt to ascertain what average people buy by using a representative sample of goods and services. Option C is incorrect because the CPI does attempt to update the market basket, but it may not do so frequently enough to accurately reflect changes in prices.

A Reason Given Why the CPI Overstates the Cost of Living