In 2000, You Could Buy a Cadillac DTS for $45,000

question 171

Multiple Choice

In 2000, you could buy a Cadillac DTS for $45,000. In 2011, the Cadillac DTS sold for $55,000. While both models include anti-lock brakes and air bags (along with other similar features) , the 2011 model also includes satellite radio and new technology that provides improved gas mileage and safer driving. If the Cadillac DTS was included in the CPI basket, it would create

• A) a downward bias in the inflation rate.
• B) an upward bias in the CPI as a result of quality change bias.
• C) an upward bias in the CPI as a result of commodity substitution bias.
• D) a downward bias in the CPI as a result of new goods bias.

---

Definitions:

Self-reliance

The ability to rely on one's own capabilities, resources, and judgments.

Status Quo

The existing state of affairs, particularly in terms of social or political issues.

Opportunity-driven

Entrepreneurship or actions motivated by the identification and exploitation of business opportunities.

Troika

Originally a Russian term for a sled or carriage drawn by three horses, now often used metaphorically to refer to a group of three powerful or notable people or entities.