The Chained Consumer Price Index (CPI)is a Better Measure of Prices

question 95

Multiple Choice

The chained consumer price index (CPI) is a better measure of prices than the traditional CPI because

• A) it contains producer prices,not just consumer prices.
• B) it adjusts for price changes less frequently but across more goods.
• C) it adjusts for price changes more often,especially when new goods are introduced,which is important because new products' prices tend to fall soon after introduction.
• D) the chained index is called "chained" because it includes industrial goods that are not included in the traditional CPI.
• E) while omitting producer prices,it includes substitution between goods as relative prices change.

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