Inaccuracies Of The Consumer Price Index (CPI)
Beginning of paper
Inaccuracies of the Consumer Price Index (CPI)
The Consumer Price Index is a measure of the prices of a fixed market
basket of some 300 consumer goods and services purchased by a "typical" urban
consumer. The 1982-1984 period serves as the base period so analysts can compare
other year's changes wi ....
Middle of paper
.... has shifted. The CPI
assumes that this does not occur and therefore it overcompensates the standard
of living.
Secondly, because the base period was over a decade ago, the quality of
the products has increased significantly, and therefore the prices should be
higher. The CPI, however, assumes that the increases in prices is a result of
inflation rather than quality improvements which is false. Here also, the CPI
overstates the rate of inflation.
Many consumers do not mind the overcompensat ....
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Word count: 452
Page count: 2 (approximately 250 words per page)
