Eco 100

3 . Home computers and DVD players invite not been ploughshare of the U .S . economy for very long . Both goods have been decrease in cost and improving in graphic symbol . What problems does this situation pose for people who are responsible for compute a charge indexA price index is the weighted reasonable of similar goods and services at a certain interval of beat in a certain country . It is in the main used to contrast how pries differ between different countries and time periods There are two major problems faced when computing a price index for computers and DVD players , both comparatively new additions in the US economy . First of any , if we add them in our index s basket of goods how do we analyse them to previous periods of time ?

After all , they are relatively new inventions so futile to compare them with older periods On the other hand , if they are updated such that most of their features swap , it would not be fair to use the matched model price index to compare them with the last few years . what is more , prices increase if quality increases . If consumers start jerk offting better value-for-money from these items , the price index becomes a misleading statistic as it shows that the PI is decreasing with better quality . Such conflicting properties cannot usually be adjusted then in the price index4 . The health using up component of the GDP price index has been rising steadily . How might this index be biased by...If you want to get a full essay, order it on our website: Orderessay

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