Which of the following is NOT a consequence of the CPI bias?
A)The state of the economy will be understated.
B)The CPI-indexed government transfer payments will be higher than the amount planned.
C)The monetary policy that targets inflation will need to adjust for the CPI bias.
D)The economic growth rate will be biased upward.

Question

Quizplus · Accepted Answer

The CPI bias typically results in an overstatement of inflation, leading to an overstatement of the cost of living index and an understatement of real economic growth. Therefore, option D which suggests an upward bias in economic growth rate is not a consequence of the CPI bias.

Which of the Following Is NOT a Consequence of the CPI