Budget a Consists Mostly of Food, Health Care and an Apartment

question 40

Multiple Choice

Budget A consists mostly of food, health care and an apartment and Budget B is made up largely of Food, Entertainment, and Travel. If inflation is estimated by the consumer price index which includes all the items listed above and travel and healthcare had the biggest jump in prices, which of the following is true?

• A)Budget A will likely have a less accurate estimate than budget B
• B)Inflation will be equally biased for both budgets
• C)Budget B will likely have a less accurate measurement than budget A
• D)There should be no bias in this case because of the simple budget components

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