When peach prices soar and shoppers switch to other fruit, a fixed bas…

Question

When peach prices soar and shoppers switch to other fruit, a fixed basket overstates inflation. This is:

Accepted Answer

C. Substitution bias

1. A fixed basket assumes no switching.
2. That is substitution bias.
3. It overstates the true cost of living.
_Source: OpenStax Principles of Macroeconomics for AP Courses 2e, Chapter 8, Inflation (CC BY 4.0)._

Answer

New goods bias

Answer

Base year bias

Answer

Quality bias

When peach prices soar and shoppers switch to other fruit, a fixed basket overstates inflation. This is:

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