The Base Period for CPI Calculations Is Generally 1982-84

question 276

Multiple Choice

The base period for CPI calculations is generally 1982-84.In 2005,50% of households accessed the Internet through a broadband connection that would not have existed in the 1980s.This potential for bias in the CPI is referred to as ________ bias and results in ________.

• A)outlet; the CPI underestimating the true change in the cost of living
• B)new product; the CPI overestimating the true change in the cost of living
• C)outlet; the CPI overestimating the true change in the cost of living
• D)net product; the CPI underestimating the true change in the cost of living

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Definitions:

Capital Account

A national account that records the transactions involving international transfer of capital, such as foreign direct investments and portfolio investments.

Balance of Goods

The difference in value between a country's imports and exports of physical products.

Tangible Products

Physical items that can be seen, touched, and used, as opposed to services or digital products.

Intangible Products

Non-physical goods or services such as intellectual property, consulting, and insurance, that cannot be seen, touched, or physically measured.