Because consumers can sometimes substitutecheaper goods for those that have risen in price,a. the CPI overstates inflation.b. the CPI understates inflation.c. the GDP deflator overstates inflation.d. the GDP deflator understates inflation.
Because consumers can sometimes substitutecheaper goods for those that have risen in price,a. the CPI overstates inflation.b. the CPI understates inflation.c. the GDP deflator overstates inflation.d. the GDP deflator understates inflation.
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter16: Measuring The Cost Of Living
Section: Chapter Questions
Problem 4CQQ
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Question
Because consumers can sometimes substitute
cheaper goods for those that have risen in price,
a. the CPI overstates inflation.
b. the CPI understates inflation.
c. the
d. the GDP deflator understates inflation.
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