Most Economists Believe That the Biases in the Consumer Price

question 171

Multiple Choice

Most economists believe that the biases in the consumer price index cause the CPI to overstate the true inflation rate by about

• A)one-half to one percentage point.
• B)one to two percentage points.
• C)one quarter percentage point.
• D)one and one-half percentage points.
• E)more than two percentage points.

---

Definitions:

Net New Borrowing

The difference between the total amount of new borrowing and the total amount of debt repaid over a specific period.

Marginal Tax Rates

The rate at which an additional dollar of taxable income would be taxed.

Interest Income

Income earned from the lending of funds or depositing funds in interest-bearing accounts.

Eligible Dividends

Eligible dividends are those that are designated by corporations in certain countries to qualify for preferential tax treatment by the recipients.