Why Do Biases Occur In The Bank Of Canada?

Satisfactory Essays
Consumers can adjust to price changes by purchasing less of an item whose price has risen and more of a cheaper substitute.

Biases may also occur in the CPI because of the introduction of new products to the market, such as new household appliances and electronic equipment.

New brands of existing products, such as a new food, also give consumers more choice to switch items in order to help them lower their cost of living.

New products and increased variety in consumer choices are not always exactly reflected in the CPI.
To achieve a rate of monetary expansion consistent with the target range, the Bank of Canada uses its effect on short-term interest rates.

If inflation is moving upwards of the 1 to 3 per cent target range, that is usually
Get Access