Question

question 6 (2 points)
which of the following was a way for the bureau of labor statistics to reduce the quality/new good bias in its calculation of the cpi?
allow for some substitution amongst products.
remove energy and food prices.
automatically reduce the inflation by 0.5% to account for quality/new good bias.
update the list of products included in the cpi more often and rapidly.

Explanation:

The quality/new good bias in CPI occurs when new goods or improved - quality goods are not incorporated quickly enough. By updating the list of products included in the CPI more often and rapidly, the Bureau of Labor Statistics can better account for new goods and quality improvements. Allowing substitution (related to substitution bias), removing energy and food (core CPI, related to volatility), and arbitrary inflation reduction (not a standard method for quality/new good bias) are not the correct ways to address the quality/new good bias.

Answer:

Update the list of products included in the CPI more often and rapidly.