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Question 3 The "introduction of new goods" bias in the consumer price index refers to the idea that the introduction of new goods increases the value of each dollar; and since the CPI basket is adjusted infrequently it over- estimates the true cost of living for consumers. O consumers prefer new goods, even if they are worse in quality than old goods, and this causes the CPI to underestimate the true cost of living for consumers. O consumers switch to old goods when the prices of new goods increase; therefore, the CPI underestimates the true cost of living for consumers. O consumers switch to new goods when the prices of old goods increase, therefor the CPI over-estimates the true cost of living for consumers. Question 4 All else constant, a fall in the rate of saving leads to a O fall in current consumption and a fall in future production. O rise in current consumption and a fall in future production. O fall in current consumption and a rise in future production. O rise in current consumption and a rise in future production.

Question 3 The "introduction of new goods" bias in the consumer price index refers to the idea that the introduction of new goods increases the value of each dollar; and since the CPI basket is adjusted infrequently it over- estimates the true cost of living for consumers. O consumers prefer new goods, even if they are worse in quality than old goods, and this causes the CPI to underestimate the true cost of living for consumers. O consumers switch to old goods when the prices of new goods increase; therefore, the CPI underestimates the true cost of living for consumers. O consumers switch to new goods when the prices of old goods increase, therefor the CPI over-estimates the true cost of living for consumers. Question 4 All else constant, a fall in the rate of saving leads to a O fall in current consumption and a fall in future production. O rise in current consumption and a fall in future production. O fall in current consumption and a rise in future production. O rise in current consumption and a rise in future production.

Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
8th Edition
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter24: Measuring The Cost Of Living
Section: Chapter Questions
Problem 3PA
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Question 3 The "introduction of new goods" bias in the consumer price index refers to the idea that O the introduction of new goods increases the value of each dollar; and since the CPI basket is adjusted infrequently it over- estimates the true cost of living for consumers. O consumers prefer new goods, even if they are worse in quality than old goods, and this causes the CPI to underestimate the true cost of living for consumers. O consumers switch to old goods when the prices of new goods increase; therefore, the CPI underestimates the true cost of living for consumers. O consumers switch to new goods when the prices of old goods increase, therefor the CPI over-estimates the true cost of living for consumers. Question 4 All else constant, a fall in the rate of saving leads to a fall in current consumption and a fall in future production. O rise in current consumption and a fall in future production. fall in current consumption and a rise in future production. O rise in current consumption and a rise in future production.
Transcribed Image Text:Question 3 The "introduction of new goods" bias in the consumer price index refers to the idea that O the introduction of new goods increases the value of each dollar; and since the CPI basket is adjusted infrequently it over- estimates the true cost of living for consumers. O consumers prefer new goods, even if they are worse in quality than old goods, and this causes the CPI to underestimate the true cost of living for consumers. O consumers switch to old goods when the prices of new goods increase; therefore, the CPI underestimates the true cost of living for consumers. O consumers switch to new goods when the prices of old goods increase, therefor the CPI over-estimates the true cost of living for consumers. Question 4 All else constant, a fall in the rate of saving leads to a fall in current consumption and a fall in future production. O rise in current consumption and a fall in future production. fall in current consumption and a rise in future production. O rise in current consumption and a rise in future production.
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