Get premium membership and access questions with answers, video lessons as well as revision papers.

What challenges are encountered in the determination of consumer price index.(CPI)?

      

Discuss the challenges encountered in the determination of consumer price index.(CPI).

  

Answers


Maurice
(i) Problem of allocating weights to goods/ services in the basket to ensure correct/ fair weighting.

(ii) Different prices in different regions.

(iii) Inadequate data that is, many people do not keep records.

(iv) Changing consumers tastes/ preferences hence change in expenditure patterns.

(v) Choice of the base year where prices are stable.

(vi) Choice of basket of goods/ services that are commonly consumed by many average families is not easy.

(vii) Choosing a typical family that represents many average families is difficult as they do not live in the same region.
maurice.mutuku answered the question on July 26, 2017 at 08:59


Next: Under what circumstances may cash terms be used?
Previous: What factors should be considered when choosing a channel of distribution?

View More Business Studies Questions and Answers | Return to Questions Index


Learn High School English on YouTube

Related Questions