Question

Which of the following statements is correct?a. In order to calculate the inflation rate for the year 2011, we need to know the values of the consumer price index for the years 2009, 2010, and 2011.b. Changes in the consumer price index are often thought to be useful in predicting changes in the producer price index.c. Despite its name, the "consumer price index" really measures the overall cost of the goods and services bought by consumers, business firms, and units of government.d. If the prices of all goods and services changed proportionately over time, then the consumer price index would reflect no substitution bias.

Answer 1

Answer:

D. If the prices of all goods and services changed proportionately over time, then the consumer price index would reflect no substitution bias.