The Substitution Bias in the CPI Refers to the Failure

question 39

Multiple Choice

The substitution bias in the CPI refers to the failure of statisticians to:

• A)allow for the possibility that consumers switch from products whose prices are rising.
• B)allow for the possibility that consumers switch stores at which they shop.
• C)take into account improvements in goods and services.
• D)take into account new products purchased by consumers.

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Definitions:

Debt Ratio

A financial ratio that compares a company's total debt to its total assets, indicating the degree of leverage and financial risk.

Total Assets

The aggregate of all resources owned by a company, valued in monetary terms, including both current and non-current assets.

Equipment

Tangible property used in the operations of a business, not intended for sale, with a useful life extending beyond a year.

Asset Account

An account that records the value of economic resources owned by an entity, which are expected to provide future benefits.