Let CPI, represent CPI in period t and let CPI₁+1 represent the CPI in period t + 1. CPI inflation is calculated as (CPI₁+1-CPI) O A. CPI₁+1 (CPIt+1-CPI) B. CPIt CPI₁+1 CPI₁ C. O D. CPlt+1 (CPI₁+1-CPI) What are some reasons why CPI inflation may overstate true inflation? (Select all that apply.) A. The CPI may not account for improved quality of goods and services. B. The CPI does not account for substitution away from relatively more expensive goods to relatively cheaper goods. C. The CPI measures quantities of goods, not prices of goods, and, thus, does not measure inflation accurately D. The CPI includes imported goods, which are not relevant to domestic inflation. E. The CPI does not include the prices of intermediate goods and raw materials.
Let CPI, represent CPI in period t and let CPI₁+1 represent the CPI in period t + 1. CPI inflation is calculated as (CPI₁+1-CPI) O A. CPI₁+1 (CPIt+1-CPI) B. CPIt CPI₁+1 CPI₁ C. O D. CPlt+1 (CPI₁+1-CPI) What are some reasons why CPI inflation may overstate true inflation? (Select all that apply.) A. The CPI may not account for improved quality of goods and services. B. The CPI does not account for substitution away from relatively more expensive goods to relatively cheaper goods. C. The CPI measures quantities of goods, not prices of goods, and, thus, does not measure inflation accurately D. The CPI includes imported goods, which are not relevant to domestic inflation. E. The CPI does not include the prices of intermediate goods and raw materials.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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