Identify Which of the Following Statements Is False

Multiple Choice

Identify which of the following statements is false. The "substitution bias" of the CPI:

A) means that the CPI can either understate or overstate the actual change in cost of living faced by consumers.
B) refers to the fact that the CPI measures the change in expenditures necessary to consume a fixed basket of goods, whereas in reality the optimal consumption basket changes as prices change.
C) can be corrected partially by periodically updating the fixed basket of goods used in calculations.
D) refers to the fact that those who construct the CPI are biased away from including certain types of goods in the fixed basket of goods used in their calculations.