How costly are biases in the Consumer Price Index (CPI)?
What will be an ideal response?
Each year the federal government increases Social Security payments to the elderly by the rate of increase of prices as measured by the CPI. Economists believe that the CPI overstates actual price increases by between 0.5% and 1.5% a year. If we assume that the figure is 1%, and use the estimates provided by the Congressional Budget Office, reducing Social Security payments by 1% would save 42 billion dollars over a five-year period!
You might also like to view...
What was the approximate peak amount of borrowing from the Fed during the Financial Crisis of 2007-2009?
A) $2 billion B) $100 billion C) $270 billion D) $1 trillion
Which of the following statements is FALSE?
A. Wants are unlimited and include all material and nonmaterial desires. B. Services are intangible goods such as dry cleaning, hospital care, and restaurant meal preparation. C. A good is anything that gives satisfaction or happiness to individuals. D. Economic goods are available in desired quantities at a zero price.
Based on the table above which shows Chip's costs, if Chip shuts down in the short run, his total cost will be
A) $0. B) $1,000. C) $1,200. D) $4,000.
The formulae for the AIC and the BIC are different. The
A) AIC is preferred because it is easier to calculate B) BIC is preferred because it is a consistent estimator of the lag length C) difference is irrelevant in practice since both information criteria lead to the same conclusion D) AIC will typically underestimate p with non-zero probability