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5 January, 15:45

If an economist is considering swiftly increasing technological changes in an economy, which of the following is MOST likely to contribute to the CPl problem of accurately measuring of the cost of living changes? a. new goods blas b. substtution blas c. Income blas

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  1. 5 January, 19:18
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    The correct answer is option a. new goods bias.

    Explanation:

    The new goods bias arises from not taking into account new products within a price index. As these products are new, and are not used on a regular basis, they are not included in the CPI (which is the consumer price index, where the prices of products that are consumed regularly by a family are valued).

    Due to technology, prices may decrease, therefore this would generate a problem when accurately measuring changes in the cost of living.
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