Suppose that in 2010, 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, and it is cheaper to operate than gasoline engines. Which of the following problems in the construction of the CPI would this situation represent?
A) substitution bias and introduction of new goods
B) introduction of new goods and unmeasured quality change
C) unmeasured quality change and new goods
D) income bias and substitution bias
Correct Answer:
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