Problem: Suppose the price index is 100 and a typical basket of goods and services cost $8. Within the basket, you had 4 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?