Question: Suppose Apple introduces a new laptop to replace their flagship Macbook Pro currently included in the CPI basket. The price of the new laptop

Suppose Apple introduces a new laptop to replace their flagship Macbook Pro

Suppose Apple introduces a new laptop to replace their flagship Macbook Pro currently included in the CPI basket. The price of the new laptop is 10% higher than the discontinued model, but the new laptop has additional features and amenities. In this situation the CPI will tend to inflation as a result of bias. overstate; quality adjustment O overstate; substitution accurately measure; substitution O understate; quality adjustment

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The answer is option A overstatequality adjustment In this situation the CPI will tend to overstate inflation as a result of quality adjustment bias A complete measure used for estimation of rate adju... View full answer

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