When analyzing long-term trends in the Consumer Prices Index (CPI) to measure inflation, which of the following explains why CPI can misrepresent changes in the true cost of living over time?
The CPI fails to include any changes in indirect tax rates, such as VAT.
It is difficult to accurately adjust the index for quality improvements in technology and new goods.
The basket of goods and services is updated only once every ten years following a national census.
The index completely excludes both rental payments and mortgage interest payments.
43 exam-style questions on OCR A Level Economics Trends in macroeconomic indicators. Each one has a worked solution and a mark scheme showing where the marks go.