Because the CPI Is Based on a Fixed Basket of Goods,the

question 71

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.This is so because

• A)new goods and services are always of higher quality than existing goods and services.
• B)new goods and services cost less than existing goods and services.
• C)new goods and services cost more than existing goods and services.
• D)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:

Negotiable

Capable of being transferred from one person to another through endorsement or delivery, often used in the context of negotiable instruments like checks.

Promise

A promise or guarantee to take a specific action or ensure a certain outcome.

Order To Pay

A directive, usually legal or financial in nature, mandating that a certain amount of money must be paid.

Drawer

The person who writes or issues a bill of exchange, check, or draft, instructing a drawee to pay a specified sum to a payee.