The Substitution Bias in the Consumer Price Index Refers to the

question 106

Multiple Choice

The substitution bias in the consumer price index refers to the

• A)substitution by consumers of new goods for old goods.
• B)substitution by consumers of a smaller number of high-quality goods for a larger number of low-quality goods.
• C)fact that consumers substitute toward goods that have become relatively less expensive.
• D)substitution of new prices for old prices in the CPI basket of goods and services from one year to the next.

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Definitions:

Average Ages

The mean value of the ages of a group of individuals or objects.

Employees

Individuals who work part-time or full-time under a contract of employment, whether oral or written, express or implied, and have recognized rights and duties.

Monthly Sales

The total revenue or units sold by a business in one calendar month.

Bonus Plan

An incentive scheme that rewards employees with extra payments in addition to their regular salary based on performance.