ECONOMICS
INFLATION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Few households are average
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Single people have different spending patterns compared to family households
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Is slow to respond to new products and services
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Does not incorporate increases in quality
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None of the answers
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Detailed explanation-1: -It does not measure price changes in regional, rural or remote areas. The CPI also does not take into account the differences in spending patterns between individual households. Households are very different and some may spend a lot more on a certain items than others.
Detailed explanation-2: -The CPI uses hedonic quality adjustments in item categories that tend to experience a high degree of quality change either due to seasonal changes, as in apparel items, or because of innovative improvements and technological changes, as in consumer appliances and electronics.
Detailed explanation-3: -The CPI does not include investment items, such as stocks, bonds, real estate, and life insurance. (These items relate to savings and not to day-to-day consumption expenses.)
Detailed explanation-4: -The CPI is a statistic for identifying periods of inflation or deflation. It does not include things like savings and investments, and can often exclude spending by foreign visitors.