The Substitution Bias in the Consumer Price Index Refers to the Idea

question 6

Multiple Choice

The substitution bias in the consumer price index refers to the idea that consumers ________ the quantity of products they buy in response to price,and the CPI does not reflect this and ________ the cost of the market basket.

• A)change; overestimates
• B)change; underestimates
• C)do not change; overestimates
• D)do not change; underestimates

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Definitions:

Debt Investments-HTM

Debt Investments-HTM (Held-to-Maturity) are debt securities a company intends and is able to hold until they mature, recorded at amortized cost.

Bonds Payable

Long-term liabilities representing money a company owes to holders of its bonds, which must be repaid at a future date.

Debt Investments-HTM

Investments in debt securities intended to be held to maturity, accounting for fixed-income investments until they are redeemed.

Bonds Mature

The point in time when a bond's principal amount is due to be paid back to the bondholder.