The Fact That the CPI Is a Biased Measure of the Inflation

question 91

Multiple Choice

The fact that the CPI is a biased measure of the inflation rate means government outlays will

• A)increase at a faster rate than the actual inflation rate.
• B)increase at the same rate as the actual inflation rate.
• C)increase at a slower rate than the actual inflation rate.
• D)sometimes increase faster and sometimes increase slower than the actual inflation rate depending on whether the actual inflation rate exceeds 1.1 percent per year or is less than 1.1 percent per year.
• E)None of the above because the bias in inflation measured using the CPI has nothing to do with government outlays.

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