If There Is an Increase in the Price of Apples

question 32

Multiple Choice

If there is an increase in the price of apples, which causes consumers to purchase fewer kilograms of apples and more kilograms of oranges, the CPI will suffer from

• A)consumer preference bias.
• B)substitution bias.
• C)base year bias.
• D)bias due to unmeasured quality change.
• E)bias due to the introduction of new goods.

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Definitions:

Tax Liability

The total amount of tax that an individual or corporation is legally obligated to pay to a taxing authority.

Employers Withhold

The practice of employers deducting a portion of employees' wages or salaries for tax purposes before issuing the net amount to the employee.

Tax Return

The form(s) filed with a taxing authority that reports income, expenses, and other pertinent tax information, used to calculate tax liability.

Tax Liability

The complete sum of tax a person or organization is legally required to pay to a tax-collecting body.