To look at changes in the cost of living, we don't track the differences in each households actual expenditures from one year to the next on a market basket because:
Instructions: You may select more than one answer.
a) consumers may substitute the relatively expensive goods with those goods whose prices have not increased rapidly as certain goods become more expensive.
b) actual expenditures may include spending outside the country.
c) people's consumption patterns may change due to tastes or changes in income that have nothing to do with changing prices.
d) innovation can lead to the introduction of new products or improvements on existing products.
e) actual expenditures may include spending on goods and services used as inputs in the production process.
To look at changes in the cost of living, we don't track the differences in each households actual expenditures from one year to the next on a market basket because:
Instructions: You may select more than one answer.
a) consumers may substitute the relatively expensive goods with those goods whose prices have not increased rapidly as certain goods become more expensive.
b) actual expenditures may include spending outside the country.
c) people's consumption patterns may change due to tastes or changes in income that have nothing to do with changing prices.
d) innovation can lead to the introduction of new products or improvements on existing products.
e) actual expenditures may include spending on goods and services used as inputs in the production process.
