A Price Index Like the CPI, Which Uses a Fixed

Multiple Choice

A price index like the CPI, which uses a fixed basket of goods from one year to the next, will tend to overstate inflation because

A) producers are likely to change the number of goods they sell from year to year.
B) producers will generally reduce the quality of goods as prices increase over time.
C) consumers will tend to substitute away from goods that become more expensive.
D) consumers will usually reduce their consumption of goods when they become relatively cheaper.