If consumers see a measurable increase in the price of coffee, they are likely to change their consumption to less expensive tea. These substitutions would show-up in the .
A)Chained Consumer Price Index
B)Remedial Price Index
C)Core Inflation Index
D)Numerical Cost Index

Question

Quizplus · Accepted Answer

The Chained Consumer Price Index measures changes in prices over time and takes into account changes in consumer behavior, such as substituting coffee for tea due to price increases. Therefore, the substitutions from coffee to tea would show up in the Chained Consumer Price Index. The Remedial Price Index and Numerical Cost Index are not commonly used price indexes. The Core Inflation Index excludes certain volatile items, such as food and energy, and may not accurately reflect changes in coffee prices.

If Consumers See a Measurable Increase in the Price of Coffee