A Consumer Price Index (CPI) adjustment overcompensates for inflation because it ignores
A) the income effect when relative prices change.
B) the substitution effect when relative prices change.
C) that some goods are inferior.
D) that the substitution effect may offset the income effect.
B
Economics
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A) financial decision-making. B) inflation, unemployment, and economic growth. C) the choices made by people faced with scarcity. D) how consumers make purchasing decisions.
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Competitive firms earn zero profit in the long run when
A) entry is completely free. B) entry is limited. C) Both A and B. D) Neither A nor B.
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