The increase in quality bias in the consumer price index refers to the idea that price increases in the cpi reflect pure inflation. true or false

Question

Biology

Michaela Crosby

7 January, 18:10

The increase in quality bias in the consumer price index refers to the idea that price increases in the cpi reflect pure inflation. true or false

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Kevin Gilmore · Answer 1

It could be considered False

The idea is incomplete and not defines the essence of quality bias. Quality bias refers to the mismeasurement in consumer price index if it is not incorporated data on the quality of goods.

That is, the CPI serve as measure of consumer inflation rate (price increment), it is overstated when it is not considered the data on quality and only pure inflation is reflected.