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.

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Definitions:

Sodium Stearate

A sodium salt of stearic acid, often used as a surfactant in soaps and as a thickening agent.

Calcium Ions

Positively charged calcium atoms (\(Ca^{2+}\)) that play crucial roles in biological processes, including muscle contraction, neurotransmitter release, and bone formation.

Lipid Bilayer

A fundamental structure in cell membranes composed of two layers of lipid molecules, crucial for cellular integrity and function.

Hydrophobic

Describing molecules or parts of molecules that repel water, often nonpolar substances that do not mix well with water.