Question

The base period for cpi calculations is generally 1982-84. in 2005, 50% of households accessed the internet through a broadband connection that would not have existed in the 1980s. this potential for bias in the cpi is referred to as ________ bias and results in ________.

Answer 1

The answers are new product; the CPI overestimating the true change in the cost of living

Answer 2

The base period for cpi calculations is generally 1982-84. in 2005, 50% of households accessed the internet through a broadband connection that would not have existed in the 1980s. this potential for bias in the cpi is referred to as new product bias and results in a production loss.