Which of the Following Means That the CPI Overstates the Actual

question 407

Multiple Choice

Which of the following means that the CPI overstates the actual inflation rate?

• A) new goods bias
• B) quality change bias
• C) outlet substitution bias
• D) All of the above cause the CPI to overstate inflation.

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Definitions:

Deflation

The reduction of the general level of prices in an economy, which can increase the real value of money but may also lead to decreased spending.

Fingertip Oximeter Sensor

A device placed on the fingertip to measure the oxygen saturation of the blood, commonly used to evaluate respiratory and cardiovascular health.

Oxygen Level

The concentration of oxygen in the blood, essential for maintaining bodily functions and often measured using pulse oximetry.

Sensor

A device that detects or measures a physical property and records, indicates, or otherwise responds to it, often used in various technological and scientific applications.