The Substitution Bias in the Consumer Price Index Refers to the Idea

question 6

Multiple Choice

The substitution bias in the consumer price index refers to the idea that consumers ________ the quantity of products they buy in response to price,and the CPI does not reflect this and ________ the cost of the market basket.

• A)change; overestimates
• B)change; underestimates
• C)do not change; overestimates
• D)do not change; underestimates

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Definitions:

Egalitarian

A belief in human equality especially with respect to social, political, and economic affairs.

Marital Relationships

The emotional, social, and legal connection between spouses that involves mutual rights, duties, and a shared life.

Indentured Servants

Individuals bound by contract to work for another for a specified period in exchange for passage, accommodation, and/or training.

Infant Death Rates

The rate at which infants, typically under one year of age, die in a given population, often used as an indicator of a community's health status.