The Substitution Bias Is Believed to Cause the Consumer Price

question 97

Multiple Choice

The substitution bias is believed to cause the consumer price index to:

• A)overstate the true rate of inflation.
• B)understate the true rate of inflation.
• C)understate the true GDP deflator.
• D)none of these.

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Definitions:

Piaget's

Jean Piaget, a Swiss psychologist, garnered recognition for his foundational contributions to the study of child development, especially his cognitive development theory.

Mentally Rotate

The cognitive ability to imagine an object turning in space, often tested in spatial visualization tasks.

Fluid Intelligence

The intelligence quotient derived from tests involving tasks that require reasoning but not prior knowledge.

Crystallized Intelligence

The intelligence quotient derived from tests involving knowledge-based questions.