If the Boskin Commission's conclusion that the CPI ______ the "true" inflation rate is correct, then the true improvement in living standards over time has been _____.
A) understates; overestimated
B) understates; underestimated
C) overstates; underestimated
D) measures; overestimated

Question

Quizplus · Accepted Answer

The Boskin Commission concluded that the CPI overstates the "true" inflation rate. If inflation is overstated, then the real improvement in living standards (which is calculated by adjusting nominal income growth by inflation) has been underestimated.

If the Boskin Commission's Conclusion That the CPI ______ the "True