Fixed weight indexes can not account for new goods.

Question

Quizplus · Accepted Answer

Fixed weight indexes use a fixed basket of goods to measure inflation over time. However, they cannot account for new goods that enter the market, which can lead to an overestimation of inflation if the new goods are cheaper than the items in the fixed basket, or an underestimation if the new goods are more expensive. This is why some economists prefer to use chain-weighted indexes, which allows for the basket of goods to change over time.

Fixed Weight Indexes Can Not Account for New Goods