The permanent income hypothesis is associated with

How do markets provide for an efficient allocation of scarce resources?

What will be an ideal response?

The increase in quality bias in the consumer price index refers to the idea that price increases in the CPI reflect pure inflation, but ________ quality increases. This causes the CPI to ________ the cost of the market basket

A) not; overstate B) also; understate C) also; overstate D) not; understate