74. When the quality of a consumption good improves, what happens to the purchasing power of the dollar? (A) It decreases, so the CPI understates the change in the cost of living if the quality change is not accounted for. (B) It decreases, so the CPI overstates the change in the cost of living if the quality change is not accounted for. (C) It increases, so the CPI overstates the change in the cost of living if the quality change is not accounted for. (D) It increases, so the CPI understates the change in the cost of living if the quality change is not accounted for.

74. When the quality of a consumption good improves, what happens to the purchasing power of the dollar? (A) It decreases, so the CPI understates the change in the cost of living if the quality change is not accounted for. (B) It decreases, so the CPI overstates the change in the cost of living if the quality change is not accounted for. (C) It increases, so the CPI overstates the change in the cost of living if the quality change is not accounted for. (D) It increases, so the CPI understates the change in the cost of living if the quality change is not accounted for.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter22: Inflation

Section: Chapter Questions

Problem 7SCQ: Go to this website (http://www.measuringworth.com/ppowerus/) for the Purchasing Power Calculator at...

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