The "New Product Bias" in the Consumer Price Index Refers

question 2

Multiple Choice

The "new product bias" in the consumer price index refers to the idea that

• A)consumers switch to new goods when the prices of old goods increase,and the CPI overestimates the cost to consumers.
• B)consumers switch to old goods when the prices of new goods increase,and the CPI underestimates the cost to consumers.
• C)consumers prefer new goods,even if they are worse in quality than old goods,and this causes the CPI to underestimate the cost to consumers.
• D)new products' prices often decrease after their initial introduction,and the CPI is adjusted infrequently and overestimates the cost to consumers.

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Definitions:

Amygdala

A part of the brain involved in processing emotions, particularly fear and pleasure.

Cerebellum

A region of the brain that plays a significant role in motor control, balance, and coordination.

Hippocampus

A major component of the brain's limbic system involved in memory formation and spatial navigation.

Engram

A hypothetical permanent change in the brain accounting for the existence of memory; a memory trace.