Most Studies in the 1990s Concluded That the Consumer Price

question 11

Multiple Choice

Most studies in the 1990s concluded that the consumer price index overstated inflation by about

• A)3 percentage points, and that number of percentage points likely still applies now.
• B)3 percentage points, but improvements in recent years to the CPI probably have reduced the overstatement of inflation to something less than 3 percentage points.
• C)1 percentage point, and that number of percentage points likely still applies now.
• D)1 percentage point, but improvements in recent years to the CPI probably have reduced the overstatement of inflation to something less than 1 percentage point.

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Definitions:

Residuals

The differences between observed and predicted values of data, used in statistical models to analyze the goodness of fit.

Sum Of Squared Deviations

The total of the squared differences between each observation and the mean of the data set, used in statistical analysis to measure variability.

Sum Of Squares For Error

A measure used in statistical analysis to quantify the discrepancy between observed and expected values, summing the squares of these deviations.

Direct Relationship

A relationship between two variables in which they move in the same direction, meaning as one variable increases, the other also increases.