Tuesday, March 20, 2007

Unit 3: Measuring inflation; what goes in the CPI's basket of goods

The annual changes to what is included in the basket of goods on which the CPI is calculated have been announced and can be found in these 2 articles

http://news.bbc.co.uk/1/hi/business/6466083.stm

http://news.bbc.co.uk/1/hi/business/6466083.stm

a) Why do these changes in the basket of goods occur annually?
b) Why, despite these annual changes, is the basket of goods (and the weights used) already out of date?

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