Question about cpi calculation

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Assume that the price index is one hundred and a typical basket of goods and services cost $8. Within the basket, you had four hamburgers and 3 hot dogs. In 2001 the basket cost $100.00, 2002 the basket costs $175.00, 2003 the basket costs $250.00.

Name 4 weaknesses and 4 strengths in the CPI calculation. In addition, if the CPI is imperfect, why do we use it? Is the CPI calculation effective?

 

Reference no: EM1376289

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