Because a third of government outlays are linked directly to the CPI, as time passes, the CPI bias means that the government's outlays are
A) larger than needed to keep pace with the cost of living.
B) larger than needed to keep pace with the cost of living if the CPI is falling from one year to the next, otherwise the outlays are smaller than needed to keep pace with the cost of living.
C) exactly equal to the changes in the cost of living.
D) smaller than needed to keep pace with the cost of living.
E) smaller than needed to keep pace with the cost of living if the CPI is falling from one year to the next, otherwise the outlays are larger than needed to keep pace with the cost of living.
A
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If the import supply curve is upward-sloping:
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Which of the following will reduce the velocity of circulation of the money stock?
A. The inflation rate increases. B. The interest rate falls. C. Credit cards are used more frequently. D. More employees are paid once a week instead of once a month.