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Which of the following is NOT a source of bias in the CPI? i. quality change...

Which of the following is NOT a source of bias in the CPI?

i. quality change bias

ii. new goods bias

iii. quantity change bias

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Answer #2

Answer is 3. Quantity change bias.

Change in quantity of goods is measured in CPI and this does not create any problem in measurement. But change in quality is not measured and there is no phenomenon in CPI to consider the change in quantities of goods and other is new goods also enter the market regularly but CPI calculates the price level of only those goods which have listed in CPI basket.

So quantity change is not a bias.

#Please rate positively...thank you

answered by: anonymous
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