Multiple Choice
The substitution by consumers of one good for another because of relative price changes is:
A) not captured by the CPI and causes the CPI to overestimate the cost-of-living changes.
B) captured by the CPI and causes the CPI to overestimate the cost-of-living changes.
C) not captured by the CPI and causes the CPI to underestimate the cost-of-living changes.
D) captured by the CPI and causes the CPI to underestimate the cost-of-living changes.
Correct Answer:
Verified
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