The bias in the CPI distorts private contracts because
A) a future payment that is linked to the CPI is likely to be raised above the true increase in the price level.
B) a worker that links her salary to the CPI is likely to be worse off than a worker that doesn't link her salary to the CPI.
C) a lender that links the interest payments on the loan to the CPI is likely to be worse off than a lender that does not link the interest payments on the loan to the CPI.
D) a future increase in a payment that is linked to the CPI is likely to be less than the true increase in the price level.
E) the CPI cannot properly account for what goods and services a typical urban consumer buys.
A
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Graphically, a market demand curve is found by
A) taking the average of all prices that people are willing to pay. B) summing the quantities demanded by all individuals at each price. C) summing the prices each consumer would pay for each quantity. D) taking the average of the individual demand curves.
A natural monopoly is a monopoly that arises from:
A. having exclusive control over the natural resources used to produce a good. B. having an exclusive right to operate in a national park. C. a firm's natural desire to maximize its profit. D. economies of scale.
The expenditure approach to GDP accounting includes:
a. wages and salaries.
b. net exports.
c. net interest.
d. corporate profit.
e. proprietors' income.
Unemployment that occurs when there are not enough jobs for the number of people in the labor force is referred to as:
A. Frictional unemployment. B. Structural unemployment. C. Cyclical unemployment. D. Seasonal unemployment.