The chained consumer price index (CPI) is a better measure of prices than the traditional CPI:
A) because it contains producer prices, not just consumer prices.
B) because it adjusts for price changes less frequently but across more goods.
C) because it adjusts for price changes more often, especially when new goods are introduced, which is important because new products' prices tend to fall soon after introduction.
D) because the chained index is called "chained" because it includes industrial goods that are not included in the traditional CPI.
E) because while omitting producer prices, it includes substitution between goods as relative prices change.

Question

Quizplus · Accepted Answer

The chained CPI adjusts for price changes more frequently and accounts for the introduction of new goods, which is important as new products often see price declines after their introduction.

The Chained Consumer Price Index (CPI) Is a Better Measure