As inflation drives up prices, people attempt to find substitutes and adjust what they buy. The resulting substitution bias problem causes the CPI to:
a. overstate the impact of higher prices on consumers.
b. consistently underestimate the true inflation rate.
c. omit the benefits of product quality improvements.
d. have larger fluctuations than other price indexes.
a
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Figure 7-7
In Figure 7-7 at 100 units, AVC equals
A. 8. B. 800. C. 100. D. 1,000.
The sum of the marginal propensity to consume (MPC) and the marginal propensity to save (MPS) always equals:
A. 1. B. 0. C. the interest rate. D. the marginal propensity to invest (MPI).
Which of the following is NOT associated with debt restructuring?
A. Debt rescheduling B. Collective action clauses C. Taxes on international borrowing D. Debt reduction
The long-run equilibrium for a firm in an information product industry exists at a point at which
A) marginal cost equals marginal revenue. B) the demand curve crosses the marginal cost curve. C) the demand curve is tangent to the average total cost curve. D) average total cost is minimized.