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Unformatted text preview: actually paying for the goods and services. CPI does not recognize all the quality improvements in goods and services through time. Because of the quality bias CPI will wrongly report that items have increased in price when consumers are really paying more to get a better product. New products are also not put into CPI immediately after they are introduced. When the new products price falls the CPI will not see the price fall and that will overstate inflation. Kundrat 2 The national budget is also affected by the CPI. If inflation is corrected to fix the one percentage overestimate then the national deficit will decrease and the budget will actually grow. There would be more money that the government would be able to use in the national budget....
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