The Substitution Bias in the CPI Results from the Index

question 48

Multiple Choice

The substitution bias in the CPI results from the index not taking into account:

• A)the substitution of new goods for old goods in the purchases of consumers
• B)that consumers substitute towards goods that have become relatively less expensive
• C)the substitution of new prices for old prices in the basket of goods from one year to the next
• D)the substitution of quality for quantity in consumer purchases over time

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Definitions:

Assessment Mechanism

A system or method used to evaluate, measure, or appraise someone's abilities, needs, or performance.

Recognize

The act of identifying or acknowledging the existence, validity, or legality of something.

Home Visits

A professional practice involving providers visiting the homes of their clients to deliver services or conduct assessments in a familiar and comfortable setting for the client.

Instincts

Innate, typically fixed patterns of behavior in animals and humans in response to certain stimuli.