Suppose OPEC succeeds in raising world oil prices by 300 percent. This price increase causes inventors to look at alternative sources of fuel for internal-combustion engines. A hydrogen-powered engine is developed which is cheaper to operate than gasoline engines. Which problems in the construction of the CPI does this situation represent?
A) Substitution bias and introduction of new goods
B) Introduction of new goods and unmeasured quality change
C) Substitution bias and unmeasured quality change
D) Income bias and substitution bias
Correct Answer:
Verified
Q172: Table 24-2
The following table pertains to
Q173: When the quality of a good improves
Q174: Suppose that in 2018, the producer price
Q175: The consumer price index tries to gauge
Q176: The CPI and the GDP deflator
A)generally move
Q178: An increase in the price of bread
Q179: Table 24-1
The following table pertains to
Q180: The CPI differs from the GDP deflator
Q181: Table 24-4
Lee's expenditures on food for three
Q182: Scenario 24-1
Sue Lewis was an accountant in
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