Substitution Bias in the CPI Refers to the Fact That

question 262

Multiple Choice

Substitution bias in the CPI refers to the fact that the CPI

• A) takes into account the substitution of goods by consumers when relative prices change.
• B) takes no account of the substitution of goods by consumers when relative prices change.
• C) substitutes quality changes whenever they occur without taking account of the cost of the quality changes.
• D) substitutes relative prices for absolute prices of goods.

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