Multiple Choice
By not taking into account the possibility of consumer substitution, how is the CPI biased?
A) It understates the cost of living.
B) It overstates the cost of living.
C) It may overstate or understate the cost of living depending on how much prices rise.
D) It doesn't accurately reflect the cost of living, but it is unclear if it overstates or understates the cost of living.
Correct Answer:
Verified
Correct Answer:
Verified
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