Most Economists Agree That the Consumer Price Index Slightly Overstates

question 22

Multiple Choice

Most economists agree that the Consumer Price Index slightly overstates the rate of inflation (the decline in the dollar's buying power) . The main reason is that the

• A) CPI is not based on a randomized comparative experiment.
• B) CPI uses 1982-84 = 100, and this has become out of date.
• C) CPI market basket is just a guess at what people really buy; it should be replaced by a random sample of goods and services.
• D) CPI doesn't use a standard score, so changes in the standard deviation affect the value of the CPI.
• E) fixed market basket doesn't adjust quickly enough for new products and improvements in quality.

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Definitions:

Carboxylic Acid

Organic compounds that contain a carboxyl group (-COOH), which consists of a carbon atom double-bonded to an oxygen atom and single-bonded to a hydroxyl group.

Oligopeptide

An oligopeptide is a short chain of amino acids, typically having fewer than 20 residues, connected by peptide bonds.

Polypeptide

A linear organic polymer consisting of a large number of amino-acid residues bonded together in a chain, forming part of (or the whole of) a protein molecule.

Blueprint

A detailed technical drawing or plan used for the design and construction of buildings, machinery, or systems.