Sakshi's expenditure on “education and communication" as a percentage of her total expendure is much highe than the weightage given to "education and communication" in the basket prepared by the government for CP calculation. If the inflation in the "education and communication" category much higher than overall inflation then, for Sakshi, A. CPI overstates inflation B. CPI understates inflation C. It cannot be concluded whether CPI overstates or understates inflation D. Education and communication are not important.

Exploring Economics
8th Edition
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:Robert L. Sexton
Chapter18: Introduction To Macroeconomics: Unemployment, Inflation, And Economic Fluctuations
Section: Chapter Questions
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Sakshi's expenditure on "education and communication" as a percentage of her total expendure is much higher
than the weightage given to "education and communication" in the basket prepared by the government for CPI
calculation. If the inflation in the "education and communication" category much higher than overall inflation,
then, for Sakshi,
A. CPI overstates inflation
B. CPI understates inflation
C. It cannot be concluded whether CPI overstates or understates inflation
D. Education and communication are not important.
Transcribed Image Text:Sakshi's expenditure on "education and communication" as a percentage of her total expendure is much higher than the weightage given to "education and communication" in the basket prepared by the government for CPI calculation. If the inflation in the "education and communication" category much higher than overall inflation, then, for Sakshi, A. CPI overstates inflation B. CPI understates inflation C. It cannot be concluded whether CPI overstates or understates inflation D. Education and communication are not important.
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