the consumer price index can be used to measure inflation. there are potential problems with this process though that can result in inflation being overstated or understated. place each statement to according if it would cause inflation to be overstated, understated, or be an accurate representation of inflation. causes inflation to be overstated causes inflation to be understated does not cause inflation to be overstated or understated Answer BANK: Mary and Bob replace their old minivan with a new one. The new van costs 15% more than the old van, but the new model has many updated features like a camera to assist with backing up, GPS and better fuel economy. Donna, a confirmed chocoholic, notices that her favorite candy bar shrank in size, but its price stayed the same. Zach loves bagels, but bagels are becoming more expensive so he changes his breakfast routine to include a muffin instead because muffins remain relatively cheap. Chris is an avid runner. He is loyal to one particular brand and buys a new pair of the same shoes every few months. The price of his shoes has doubled in the last 15 years.
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causes inflation to be overstated |
causes inflation to be understated |
does not cause inflation to be overstated or understated
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Answer BANK:
Mary and Bob replace their old minivan with a new one. The new van costs 15% more than the old van, but the new model has many updated features like a camera to assist with backing up, GPS and better fuel economy.
Donna, a confirmed chocoholic, notices that her favorite candy bar shrank in size, but its price stayed the same.
Zach loves bagels, but bagels are becoming more expensive so he changes his breakfast routine to include a muffin instead because muffins remain relatively cheap.
Chris is an avid runner. He is loyal to one particular brand and buys a new pair of the same shoes every few months. The price of his shoes has doubled in the last 15 years.
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