Suppose manufacturers introduce a new model car to replace a car currently included in the CPI basket. The price of the new car is 10 percent higher than the discontinued model, but the new car has additional safety features and amenities. In this situation the CPI will tend to ________ inflation as a result of ________ bias.
A. accurately measure; substitution
B. overstate; quality adjustment
C. overstate; substitution
D. understate; quality adjustment
Answer: B
Economics
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Which of the following events would cause the supply curve to decrease from S1 to S2?
A. lower expected future prices B. an increase in the price of inputs C. an increase in the number of firms in the market D. a decrease in the price of inputs
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We have run trade deficits every year since ________.
Fill in the blank(s) with the appropriate word(s).
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