An Example of the New Goods Bias in the Calculation

question 243

Multiple Choice

An example of the new goods bias in the calculation of the CPI is a price increase in

• A) butter relative to margarine.
• B) an iPod player relative to a Walkman.
• C) a 2011 Honda Civic Si Coupe relative to a 2011 Honda Civic Si Sedan.
• D) textbooks bought through the campus bookstore relative to textbooks bought through Amazon.com.
• E) a Caribbean cruise for a couple who has never been on a cruise before.

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Definitions:

Structural Explanation

An approach in social science that explains phenomena in terms of the underlying social structures, such as economic, political, or legal systems.

Boom And Bust

An economic cycle characterized by periods of rapid expansion and prosperity followed by sudden decline and recession.

Shortage Of Workers

A situation where the demand for labor exceeds the supply of available workers in certain industries or geographic areas.

Early Capitalists

Early capitalists refer to individuals and groups in the 16th to 18th centuries who initiated and benefited from the early stages of capitalism, developing new methods of production, finance, and global trade.