Multiple Choice
Suppose that the price of chicken rises sharply compared to the price of turkey. In response, consumers buy more turkey and less chicken than they did in the CPI base year. In this situation the CPI will tend to ________ inflation as a result of ________ bias.
A) overstate; substitution
B) understate; substitution
C) accurately measure; substitution
D) overstate; quality adjustment
Correct Answer:
Verified
Correct Answer:
Verified
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