Respuesta :

The problems that make CPI an imperfect measure of the cost of living

  1. The cpi value does not reflect changes in the quality of goods and services that are in the basket of goods.
  2. The CPI does not reflect spending patterns between individual households.
  3. The CPI ignores the presence of substitute goods and this causes the CPI to be overstated. This known as the substitution bias.

What is the CPI?

CPI is an abbreviation of consumer price index. The consumer price index measures the changes in price of a basket of good that is consumed by people in a country. It is used to measure inflation.

The formula used to determine CPI is :

CPI = (cost of basket of goods in current period / cost of basket of goods in base period) x 100

To learn more about, consumer price index, please check: https://brainly.com/question/26382640

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