The substitution bias in the consumer price index occurs because a. the consumer price index assumes that consumers buy a fixed basket of goods when in fact consumers can substitute cheaper items for more expensive ones b. the consumer price index counts only price increases and ignores any price decrease c. the consumer price index includes the prices of only domestically produced goods when in fact consumers buy imported goods d. the consumer price index includes the prices of every good and service when in fact consumers do not typically buy every good and service

The substitution bias in the consumer price index occurs because a. the consumer price index assumes that consumers buy a fixed basket of goods when in fact consumers can substitute cheaper items for more expensive ones b. the consumer price index counts only price increases and ignores any price decrease c. the consumer price index includes the prices of only domestically produced goods when in fact consumers buy imported goods d. the consumer price index includes the prices of every good and service when in fact consumers do not typically buy every good and service

Principles of Economics, 7th Edition (MindTap Course List)

7th Edition

ISBN:9781285165875

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter24: Measuring The Cost Of Living

Section: Chapter Questions

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	a.	the consumer price index assumes that consumers buy a fixed basket of goods when in fact consumers can substitute cheaper items for more expensive ones
	b.	the consumer price index counts only price increases and ignores any price decrease
	c.	the consumer price index includes the prices of only domestically produced goods when in fact consumers buy imported goods
	d.	the consumer price index includes the prices of every good and service when in fact consumers do not typically buy every good and service