multiple choice question\nthe two factors that may lead the cpi to overstate the true rate of inflation…

multiple choice question\nthe two factors that may lead the cpi to overstate the true rate of inflation are\no income bias and quality adjustment bias.\no quality adjustment bias and substitution bias.\no income bias and inflation bias.\no substitution bias and income bias.

multiple choice question\nthe two factors that may lead the cpi to overstate the true rate of inflation are\no income bias and quality adjustment bias.\no quality adjustment bias and substitution bias.\no income bias and inflation bias.\no substitution bias and income bias.

Answer

Brief Explanations:

The Consumer - Price Index (CPI) may overstate inflation due to quality adjustment bias (difficulty in accurately accounting for quality changes in goods and services) and substitution bias (consumers substitute cheaper goods when prices rise, but CPI may not fully capture this). Income bias is not one of the main factors causing CPI to overstate inflation.

Answer:

B. quality adjustment bias and substitution bias