Which of the following makes the Consumer Price Index a less accurate measure of the cost of living?
I.The monthly price survey conducted to collect information about prices is very unreliable.
Ii.The existence of a new goods bias in the calculation of the CPI
Iii.The existence of a quality change bias in the calculation of the CPI

Question

Quizplus · Accepted Answer

Option (i) is not correct as the monthly price survey conducted to collect price information is very reliable. Option (ii) is correct because the existence of a new goods bias can lead to the introduction of new goods with lower prices, which may reduce the measurement of inflation. Option (iii) is also correct because the existence of a quality change bias can lead to an overestimate or underestimate of inflation when the quality of the goods changes. Therefore, options (ii) and (iii) make the Consumer Price Index a less accurate measure of the cost of living.

Which of the Following Makes the Consumer Price Index a Less