Suppose Prices of Personal Computers Fall Significantly and Consumers Respond

question 163

Multiple Choice

Suppose prices of personal computers fall significantly and consumers respond by buying more personal computers.The consumer price index

• A)reflects this price decrease accurately.
• B)understates this price decrease due to the substitution bias.
• C)overstates this price decrease due to the income bias.
• D)overstates this price decrease due to the substitution bias.

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