Suppose That the Price of Chicken Rises Sharply Compared to the Price

question 53

Multiple Choice

Suppose that the price of chicken rises sharply compared to the price of turkey. In response, consumers buy more turkey and less chicken than they did in the CPI base year. In this situation the CPI will tend to ________ inflation as a result of ________ bias.

• A)overstate; substitution
• B)understate; substitution
• C)accurately measure; substitution
• D)overstate; quality adjustment

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Definitions:

Burrowing Owl

A small, ground-dwelling bird notable for its habit of living in burrows, often those abandoned by other animals, found in open landscapes across the Americas.

Labrador Duck

An extinct North American bird species, characterized by its black and white plumage, known for its rarity and mystery surrounding its extinction.

Passenger Pigeon

A species of pigeon that was once abundant in North America but became extinct in the early 20th century due to overhunting and habitat destruction.

Specialized Niche

A specific or focused role played by an organism or entity within its environment, often referring to a narrow adaptation to a particular set of conditions.