The ratio (Price Level in Earlier Time) / (Price Level Today) would be used to:_________
a. find the percentage of substitution bias.
b. convert an earlier price to today's price, adjusting for inflation.
c. convert the consumer price index (CPI) to the gross domestic product (GDP) deflator.
d. convert today's price to an earlier price, adjusting for inflation.
e. find the percentage of the quality change bias.
Option d (convert.................inflation) is the correct approach.
Explanation:
The proportion [tex]\frac{(Price\ level \ of \ earlier \ times)}{(Price \ level \ of \ today)}[/tex] would have been utilized to incorporate or transform today's moment to something like an earlier market value, making adjustments rising prices.
As well as the rate of return [tex]\frac{(Today's \ price)}{(Earlier \ price)}[/tex] will indeed transfer the previous price to current prices, modifying inflation.
Some other preferences really aren't comparable to the scenario in question. So the above obvious response is the correct one.
