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Essay

Inaccuracies Of The Consumer Price Index(cpi)

Essay specific features

 

Issue:

Business

 

Written by:

Kevin G

 

Date added:

March 20, 2012

 

Level:

 

Grade:

B

 

No of pages / words:

2 / 451

 

Was viewed:

1011 times

 

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Essay content:

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...
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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...
displayed 300 characters

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