17) Price indexes can overstate inflation because they A) omit some quality improvements. B) do not contain the prices of any used goods. C) do not contain the prices of foreign goods. D) do not contain the prices of services.

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ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
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Chapter22: Inflation
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Problem 36P: If inflation rises unexpectedly by 5, indicate for each of the following whether the economic actor...
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Please answer the questions 17)

16) The table below shows the price index for China starting in 2000.
Year
2000
Price Index
100.0
2001
100.73
2002
99.95
101.12
2003
2004
105.06
2005
106.95
2006
108.52
The inflation rate between 2004 and 2005 was
A) 3.9 percent
B) 2.8 percent
C) 1.8 percent
D) 0.7 percent.
17) Price indexes can overstate inflation because they
A) omit some quality improvements.
B) do not contain the prices of any used goods.
C) do not contain the prices of foreign goods.
D) do not contain the prices of services.
Transcribed Image Text:16) The table below shows the price index for China starting in 2000. Year 2000 Price Index 100.0 2001 100.73 2002 99.95 101.12 2003 2004 105.06 2005 106.95 2006 108.52 The inflation rate between 2004 and 2005 was A) 3.9 percent B) 2.8 percent C) 1.8 percent D) 0.7 percent. 17) Price indexes can overstate inflation because they A) omit some quality improvements. B) do not contain the prices of any used goods. C) do not contain the prices of foreign goods. D) do not contain the prices of services.
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