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Author Question: Which of the following means that the CPI overstates the actual inflation rate? A) new goods bias ... (Read 77 times)

ss2343

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on: Jun 29, 2018
Which of the following means that the CPI overstates the actual inflation rate?
 
  A) new goods bias
  B) quality change bias
  C) outlet substitution bias
  D) All of the above cause the CPI to overstate inflation.

Question 2

How does the income approach measure GDP?
 
  What will be an ideal response?


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macmac

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Reply #1 on: Jun 29, 2018
Answer to Question 1

D

Answer to Question 2

The incomes approach adds the compensation of employees, net interest, rental income, corporate profits and proprietors' income to give net domestic income at factor cost. Then indirect taxes and depreciation are added. Finally, subsidies are subtracted to obtain GDP.


ss2343

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Reply 2 on: Jun 29, 2018
Thanks for the timely response, appreciate it

flexer1n1

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Reply 3 on: Yesterday
Excellent

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