In 2000, You Could Buy a Cadillac DTS for $45,000

question 171

Multiple Choice

In 2000, you could buy a Cadillac DTS for $45,000. In 2011, the Cadillac DTS sold for $55,000. While both models include anti-lock brakes and air bags (along with other similar features) , the 2011 model also includes satellite radio and new technology that provides improved gas mileage and safer driving. If the Cadillac DTS was included in the CPI basket, it would create

• A) a downward bias in the inflation rate.
• B) an upward bias in the CPI as a result of quality change bias.
• C) an upward bias in the CPI as a result of commodity substitution bias.
• D) a downward bias in the CPI as a result of new goods bias.

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Definitions:

Orbicularis Oculi

A circular muscle that surrounds the eye socket and allows for the closing of the eyelids.

Levator Palpebrae Superioris

A muscle in the orbit of the eye responsible for raising the upper eyelid, enabling the eye to open.

Eyelid

Movable fold of skin in front of the eyeball; also called palpebra.

Inferior Rectus

A muscle in the eye that contributes to downward gaze or moving the eye downward.