The fact that Dollarama's sales increased during the recent recession indicates that
A)inflation measured by the CPI understates the true increases in the cost of living.
B)the CPI is a better measure for the cost of living than the GDP deflator.
C)inflation measured by the CPI overstates the true increases in the cost of living.
D)the CPI understates the actual cost of living.

Question

Quizplus · Accepted Answer

If Dollarama's sales increased during the recession, it suggests that consumers were looking for ways to cut costs and save money. This would indicate that inflation measured by the CPI overstates the true increases in the cost of living, as consumers are finding ways to spend less than what the index suggests they should be spending.

The Fact That Dollarama's Sales Increased During the Recent Recession