Suppose the Price of Gasoline Rises and Consumers Cut Back

question 57

Multiple Choice

Suppose the price of gasoline rises and consumers cut back on their use of gasoline relative to other consumer goods. This situation would contribute to which bias in the consumer price index?

• A) Substitution bias.
• B) Transportation bias.
• C) Quality bias.
• D) Indexing bias.

---

Definitions:

Paid-In Capital

Paid-in capital is the amount of money that a company has received from shareholders in exchange for shares of stock.

Issuing Stock

The process by which a company raises capital by distributing shares of its ownership to investors.

Corporations

Business entities that are legally separate from their owners, providing limited liability protection to its shareholders.

United States

Refers to a country located primarily in North America, comprising 50 states and known for being a major political and economic power globally.