Inaccuracies Of The Consumer Price Index(cpi)
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Title: Inaccuracies Of The Consumer Price Index(cpi)

Essay Details:

Subject: Business
Author: Charlotte B
Date: March 18, 2013
Level: University
Grade: A
Length: 2 / 451

Essay text:

The composition of the market basket is fixed in the base period and is assumed not to change from one period to another. The reason for the assumption is because the CPI measures the costliness of a constant standard of living. Critics claim that the CPI is inaccurate because it overstates the increases in the cost of living. For this reason, the CPI has been said to be inaccurate. First, consumers do change their spending patterns. Even though the composition off the market basket is assumed not to change, it does because consumers change their spending patterns. Because consumers substitute lower priced products in lieu of higher priced ones, the weight has shifted...

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