What Is One Way to Adjust the CPI for Substitution

question 85

Multiple Choice

What is one way to adjust the CPI for substitution bias?

• A) Use the Paasche index.
• B) Use the Laspeyres index.
• C) Multiply the Paasche Index and the Laspeyres index.
• D) Take the geometric mean of the Paasche index and the Laspeyres index.

Understand the fundamental differences between neoclassical economics and behavioral economics.

Recognize the contributions of behavioral economics to policymaking, including the concept of "nudging".

Identify systematic errors in human decision-making according to behavioral economics.

Comprehend how behavioral economics explains reactions to gains and losses differently from neoclassical economics.