What is substitution bias in the context of the Consumer Price Index (CPI)?

• A. It refers to the exclusion of quality improvements in goods, leading to an understatement of inflation.
• B. It refers to the inclusion of new products in the CPI basket, which can lead to an understatement of inflation.
• C. It refers to the use of outdated pricing sources in the CPI calculation, leading to an overstatement of inflation.
• D. It refers to the tendency of consumers to substitute cheaper goods for more expensive ones, which the CPI does not account for, leading to an overstatement of inflation.

Answer: (D)