Because the CPI Is Based on a Fixed Basket of Goods

question 40

Multiple Choice

Because the CPI is based on a fixed basket of goods, the introduction of new goods and services in the economy causes the CPI to overestimate the cost of living. Why is this?

• A) because new goods and services are always of higher quality than existing goods and services
• B) because new goods and services have better product warranties than existing goods and services
• C) because new goods and services cost more than existing goods and services
• D) because when a new good is introduced, it gives consumers greater choice, thus reducing the amount they must spend to maintain their standard of living

---

Definitions:

Make Amends

The process of attempting to correct wrongs done to another person, often involving an apology or restitution.

Repressing Versus Venting

The comparison between psychologically suppressing emotions and openly expressing them as ways of dealing with emotional stress.

Anger

A strong emotion characterized by feelings of hostility, frustration, or antagonism towards someone or something.

Heart Disease

A range of conditions that affect the heart, including blood vessel diseases, coronary artery disease, heart rhythm problems, and more.