Factors that cause the CPI to exaggerate the inflation rate do not include
A) the tendency of consumers to substitute relatively cheaper goods for those that have become relatively more expensive
B) political pressure from unions and retirees on the Bureau of Labor Statistics to overstate the inflation rate
C) the introduction of new technologies that make it easier to obtain the same standard of living
D) improvements over time on the quality of products
E) the increase in purchases from discount stores

Question

Quizplus · Accepted Answer

Political pressure from unions and retirees is not a factor that causes the CPI to exaggerate the inflation rate. The other options relate to substitution bias, quality improvements, and new technologies, which can lead to an overstatement of inflation.

Factors That Cause the CPI to Exaggerate the Inflation Rate