Which of the Following Is Not a Reason That the CPI

question 62

Multiple Choice

Which of the following is not a reason that the CPI may overstate the actual rate of inflation.

• A)improvements in quality are difficult to incorporate in the calculation of the CPI
• B)expanded product variety is difficult to incorporate in the calculation of the CPI
• C)energy price increases are too heavily weighted in the calculation of the CPI
• D)calculation of the CPI does not adequately account for consumer responses to changes in relative prices
• E)calculation of the CPI does not adequately account for consumer shifts to discount stores like, Wal-Mart and Target

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