Question : The rapid development of computers makes it difficult to determine : 6298
The rapid development of computers makes it difficult to determine how much of the change in measured prices of computers is due to pure price change and how much to the change in quality of the product. It is clear that the cost of obtaining a given amount of computing capability has been falling. What does this statement imply about how a change in computer prices should affect the CPI? The bank estimates that the annual inflation rate in January would have been only 3.5 percent rather than 4.1 percent had it not been for sales tax increases. And that estimate does not include any income tax increases. How are sales tax increases incorporated in the price index? Why are they relevant? What about income taxes?