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MEASURING THE COST LIVING, the inflation rate, inflation refer to a…

- - - - consumer subtitute toward goods that have become relatively less expensive
      - the index overstates the increase in cost of living by not cosidering consumer substitution
  - - - new products result in greater variety, which in turn makes each dollar more valueable
      - consumers need fewer dollars to maintain any given standard of living
- - - - its the insterest rate that a bank pays