The items included in the CPI are final goods produced in the United States. fin

Question

The items included in the CPI are final goods produced in the United States. final goods and services produced in the United States. goods and services consumed by the typical urban household. only goods and services produced within the current year and consumed by the typical household. gods but not services consumed by the typical urban household. When economists speak of the CPI bias, they are referring to the tendency for the CPI to overstate price changes. the tendency tor the CPI to understate price changes. the tendency for the CPI to understate inflation. errors in measuring the prices used in the CPI. the tendency for government officials to impose their values on the data.

Explanation / Answer

(33) Option (4)

The CPI basket comprises only goods produced in current year that are consumed by typical representative households.

(34) Option (1)

CPI can overstate price change (i.e. inflation), which results from a substitution bias.

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