Which of the Following Is NOT a Criticism of the CPI

question 19

Multiple Choice

Which of the following is NOT a criticism of the CPI?

• A) The CPI does not account for the way consumer substitute less expensive items for higher priced items.
• B) The CPI ignores changes in consumption patterns that occur between years in which it revises the index.
• C) The CPI ignores successful new products until long after they have been introduced.
• D) The CPI ignores the changes of prices of goods that firms produce and sell to each other.

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Definitions:

Estimated Life

The expected duration over which an asset is likely to be operational and useful.

Obsolescence

Obsolescence refers to the process or condition by which an object, service, or practice loses its value or utility due to aging, technological advancements, or changes in market preferences.

Present Value Factor

A factor used to calculate the present value of a future amount of money or stream of cash flows given a specific rate of return.

Desired Rate

A term that can refer to the ideal or target interest rate set by an individual or institution, often in the context of investing or borrowing.