Most economists believe that the consumer price index _____ the rate of inflation.
A) understates
B) overstates
C) accurately states
D) disinflates

Question

Quizplus · Accepted Answer

Most economists argue that the Consumer Price Index (CPI) overstates the rate of inflation because it does not fully account for the substitution effect (where consumers switch to cheaper alternatives when prices rise) and improvements in product quality over time.

Most Economists Believe That the Consumer Price Index _____ the Rate