How does commodity subsitution bias influence the CPI? The CPI ____ consumer subisuttions between goods, so when the price of carrots rises and consumers switch to broccoi, the CPI ____ the rise in the price of vegetables. A. ignores; overstates B. incorporates; correctly measures C. ignores; correctly measures D. incorporates; overstates

Essentials of Economics (MindTap Course List)
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ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter16: Measuring The Cost Of Living
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How does commodity subsitution bias influence the CPI? The CPI ____ consumer subisuttions between goods, so when the price of carrots rises and consumers switch to broccoi, the CPI ____ the rise in the price of vegetables.

A. ignores; overstates

B. incorporates; correctly measures

C. ignores; correctly measures

D. incorporates; overstates

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