A true cost-of-living adjustment in response to a change in prices would compensate consumers so that they would be able to

A) purchase the same bundle they purchased before prices changed.
B) achieve the same level of utility they did before prices changed.
C) face the same choices they did before prices changed.
D) achieve an increase in utility that is equal to the rate of inflation.


B

Economics

You might also like to view...

Interest can be defined as

A) the amount of funds loaned to a creditor. B) the participation of a shareholder in the operations of a firm. C) the return paid to owners of capital. D) the return above opportunity cost paid to owners of a firm.

Economics

In the upward-sloping segment of the aggregate supply curve,

a. increases in output are linked to decreases in the price level. b. increasing prices drag down resource costs. c. producers can hire more workers without having to raise the wage rate. d. the economy can increase aggregate supply without prices going up. e. firms are willing to pay higher wages to get more labor.

Economics

If consumers receive an increase in income of $1,000 . their spending will increase by a smaller amount

a. True b. False Indicate whether the statement is true or false

Economics

The largest component of aggregate spending is government spending.

Answer the following statement true (T) or false (F)

Economics