Which of the Following Makes the Consumer Price Index a Less

question 26

Multiple Choice

Which of the following makes the Consumer Price Index a less accurate measure of the cost of living?
i. The monthly price survey conducted to collect information about prices is very unreliable.
ii. The existence of a new goods bias in the calculation of the CPI.
iii. The existence of a quality change bias in the calculation of the CPI.

• A) i only
• B) ii only
• C) i and ii
• D) ii and iii
• E) i, ii and iii

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Definitions:

Correlation

Mutual or reciprocal relationship between two variables such that systematic changes in the values of one variable are accompanied by systematic changes in the values of another variable.

Regression

Use of a relationship between two or more correlated variables to predict values of one variable from values of other variables.

Measuring

The act of determining the size, quantity, or degree of something using standard units or tools.

Linear Regression Equation

Mathematical equation that predicts a score on one variable from a score on another variable based on the relationship between two variables.