Commodity substitution bias in the CPI refers to the fact that the CPI
A) takes into account the substitution of goods by consumers when relative prices change.
B) takes no account of the substitution of goods by consumers when relative prices change.
C) substitutes quality changes whenever they occur without taking account of the cost of the quality
changes.
D) accounts for improved quality in price rises.
E) substitutes relative prices for absolute prices of goods.
B) takes no account of the substitution of goods by consumers when relative prices change
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The level of reserves in the banking system is determined by
A) the Federal Open Market Committee. B) the Treasury Department. C) bond dealers. D) the American Banking Association.
Patents provide a firm with a monopoly on a given product. What is the economic rationale for granting patents?
What will be an ideal response?
Economists speaking like policy advisers make
a. claims about how the world is. b. descriptive statements. c. normative statements. d. More than one of the above is correct.
When a country that imports a particular good imposes a tariff on that good,
a. consumer surplus increases and total surplus increases in the market for that good. b. consumer surplus increases and total surplus decreases in the market for that good. c. consumer surplus decreases and total surplus increases in the market for that good. d. consumer surplus decreases and total surplus decreases in the market for that good.