Joe Kowalski Invents a New Product,and This New Product Becomes

question 27

Multiple Choice

Joe Kowalski invents a new product,and this new product becomes cheaper over time.This can be problematic because:

• A) the consumer price index (CPI) will include Joe's new product immediately if it is a consumer good, but as a consumer good, it will not be included in the gross domestic product (GDP) deflator.
• B) the percent change in the CPI will be distorted, but the change in the GDP deflator will not be, regardless of whether the product is a consumer good or a producer good.
• C) it is unlikely the CPI will include Joe's new product immediately, even if it is a consumer good.
• D) money illusion will cause consumers to buy more of this good than the CPI would otherwise reflect.
• E) this good might be produced in a geographic location that is not included in the CPI.

---

Definitions:

Decay

The natural process of decomposition or decline in quality, strength, or vigor over time.

Encoding Failure

A situation in which information fails to be stored into long-term memory, leading to the inability to recall it later.

Elaboration Failure

The inability to add detail or supplement information to a memory or concept, often leading to a lack of depth in understanding or recall.

Retroactive Interference

A process where new information interferes with the ability to recall older information.