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Why Does the Substitution Bias Cause the Consumer Price Index

question 115

Essay

Why does the substitution bias cause the consumer price index to overstate inflation and the cost of living? Why does the increase in quality bias cause the consumer price index to overstate inflation and the cost of living?


Definitions:

Fill Handle

A feature in spreadsheet software that allows users to extend a series of values, formulas, or data by dragging a small square at the corner of the selected cell(s).

NETWORKDAYS Function

A function in spreadsheets that calculates the number of working days between two dates, excluding weekends and any specified holidays.

Rotate Text

Altering the orientation of text to a specified angle, deviating from the standard horizontal alignment.

Fill Handle

A feature in spreadsheet programs that allows users to extend a series of data or formulas to adjacent cells by dragging the handle.

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