Question

True or false? The arrival of new goods creates problems with respect to the accuracy of measuring inflation because new goods have always been immediately included in the inflation calculations.

Answer 1

Step-by-step explanation:

inflation calculated using a fixed basket of goods over time tends to overstate the true rise in cost of living because it does not take into account imporovements in the quality of existing goods or the invention of new goods

Answer 2

False

Step-by-step explanation:

Actually there is the problem of quality/new goods bias whereby

inflation calculation such as calculated using a fixed basket of goods over time may not actually or accurately reflect the cost of living/inflation and therefore tends to overstate the true rise or fall in cost of living because it does not take into account/immediately incorporate improvements in the quality of existing goods or the invention of new goods.