Question : 31.The consumers that the CPI based does not include: A. retired persons. B. persons : 1379067

31.The consumers that the CPI is based on does not include:

A. retired persons.

B. persons living in rural areas.

C. unemployed persons.

D. The CPI does not include any of these.

32.The CPI is based on:

A. an average of the goods and services purchased by “urban consumers.”

B. an average of the goods and services purchased by “rural consumers.”

C. an average of the two baskets of goods and services purchased both by “urban” and by “rural” consumers.

D. an aggregated average meant to reflect the statistical average consumption.

33.The CPI basket of goods represents those goods and services purchased by urban consumers because:

A. it represents 87 percent of our population.

B. it represents over 90 percent of our population.

C. it represents 78 percent of our population.

D. it represents 60 percent of our population.

34.The CPI attempts to:

A. balance out the consumption of different types of people in different life stages.

B. balance out the consumption of different types of people in different life situations.

C. capture an average across a very large group of U.S. consumers.

D. All of these statements are true.

35.One problem with keeping the CPI basket fixed is:

A. it doesn’t accurately isolate price changes from behavior changes.

B. it doesn’t allow for changes in people’s preferences over time.

C. it can’t properly predict when prices will change.

D. None of these is a problem related to keeping the CPI basket fixed.

36.The substitution of one good for another by consumers:

A. due to price changes is captured by the CPI.

B. due to changes in tastes/preferences is captured by the CPI.

C. The substitution of one good for another for whatever reason is captured by the CPI.

D. The substitution of one good for another for whatever reason is not captured by the CPI.

37.The substitution by consumers of one good for another because of relative price changes:

A. is not captured by the CPI and causes the CPI to overestimate the cost-of-living changes.

B. is captured by the CPI and causes the CPI to overestimate the cost-of-living changes.

C. is not captured by the CPI and causes the CPI to underestimate the cost-of-living changes.

D. is captured by the CPI and causes the CPI to underestimate the cost-of-living changes.

38.As new goods and services become available:

A. the basket of goods used to calculate the CPI immediately changes to reflect them.

B. the basket of goods used to calculate the CPI doesn’t change until 75 percent of urban consumers use it.

C. the basket of goods used to calculate the CPI never changes to reflect them.

D. None of these statements is true.

39.Product innovation:

A. presents a problem for those calculating the CPI because they use a fixed basket of goods.

B. causes the basket of goods to inaccurately reflect the popularization of these goods.

C. can cause the CPI to be underestimated.

D. All of these statements are true.

40.In an attempt to separate the quality changes from price changes of a product over time, the BLS does a:

A. hedonic quality adjustment.

B. heterogenic quality adjustment.

C. qualitative price change.

D. qualitative market adjustment.