Which of the following means that the CPI overstates the actual inflation rate?
A)Quality change bias
B)New goods bias
C)Outlet substitution bias
D)All of the above cause the CPI to overstate inflation.

Question

Quizplus · Accepted Answer

All of the above biases—quality change bias, new goods bias, and outlet substitution bias—can cause the Consumer Price Index (CPI) to overstate the actual inflation rate by not fully accounting for improvements in product quality, the introduction of new products, and changes in consumer purchasing patterns.

Which of the Following Means That the CPI Overstates the Actual