Most economists believe that the biases in the consumer price index cause the CPI to overstate the true inflation rate by about
A)one-half to one percentage point.
B)one to two percentage points.
C)one quarter percentage point.
D)one and one-half percentage points.

Question

Quizplus · Accepted Answer

The consumer price index (CPI) is believed to overstate the true inflation rate due to factors like substitution bias, quality improvements, and new product introductions. Most economists estimate this overstatement to be about one-half to one percentage point.

Most Economists Believe That the Biases in the Consumer Price