Final answer:
A fixed basket of goods and services is what is held constant when comparing CPIs, which is used to calculate changes in prices and ostensibly the cost of living, though it has limitations like substitution and quality/new goods biases.
Step-by-step explanation:
When comparing Consumer Price Indexes (CPI's), a fixed basket of goods and services is held constant. This basket reflects the purchases of an average family of four and is used as a standard measure to track changes in prices over time. It represents the basis for CPI calculation by the U.S. Bureau of Labor Statistics. However, it should be noted that this does not necessarily equate to the change in the cost of living, which is linked to the level of satisfaction or utility a person derives from their consumption. Problems like substitution bias and quality/new goods bias may arise, indicating that the fixed basket does not account for changes in consumer behavior or improvements in product quality over time.