The consumer price index overestimates inflation because it

A. allows consumers to move along a given indifference curve from one year to the next.
B. uses the second year's market basket as the base rather than the first year's basket.
C. measures the cost of a market basket in the second year that has too many units of the most inflated items.
D. compares prices of what consumers actually buy rather than a fixed basket of goods.


Answer: C

Economics

You might also like to view...

AC is lower in the long run than in the short run because

A. prices often fall, allowing savings on purchases. B. inputs can be combined more efficiently in the long run. C. over time the prices of all inputs tend to decrease. D. AFC falls with output over all ranges of output.

Economics

Labor-augmenting technological advances decrease the marginal productivity of labor

a. True b. False Indicate whether the statement is true or false

Economics

In the area of agricultural chemicals, the Environmental Protection Agency requires detailed labeling on cans of pesticides and herbicides. Generally speaking, the industry not only doesn't oppose these labeling requirements, but even supports government-sponsored education programs on how to use these chemicals. Why?

What will be an ideal response?

Economics

Explain the difference between marginal and average tax rates

What will be an ideal response?

Economics