In 2011, consumers tended to buy bigger-screen TV sets than they did in the 1982-84 base period. How does the CPI reflect this fact?
A) It doesn't because it uses a fixed market basket.
B) It can't possibly because, if it did, the price of TVs would have gone up instead of down.
C) Every month, there is a new Consumer Expenditure Survey, which records what consumers actually buy, so the market basket changes every month.
D) The Bureau of Labor Statistics (BLS) adjusts the actual price to subtract out the part that pays for improved quality.
E) The BLS corrects by using a different base period.

Question

Quizplus · Accepted Answer

The Bureau of Labor Statistics (BLS) makes quality adjustments to account for changes in product features and quality, such as the size of TV screens, to ensure that the CPI reflects changes in consumer prices without being distorted by improvements in product quality.

In 2011, Consumers Tended to Buy Bigger-Screen TV Sets Than