Suppose hypothetically that you buy a lot of food such as tofu, veggie burgers, and organic fruit that are not included in the market basket used to compute the CPI. In addition, suppose that all of these goods have become cheaper over the last year, while the overall CPI has increased by 6 percent. Then which of the following is true?
A. The CPI will understate the negative impact of inflation on your purchasing power and standard of living.
B. The CPI will still accurately state the negative impact of inflation on your purchasing power and standard of living.
C. The CPI will overstate the negative impact of inflation on your purchasing power and standard of living.
D. Inflation has a larger effect on your standard of living than on the average consumer.
Answer: C
You might also like to view...
If the Fed increases the interest rate in the U.S.:
A) the demand curve for dollars will shift to the left. B) the demand curve for dollars will shift to the right. C) the supply curve of dollars will shift to the right. D) the real exchange rate of the U.S. will depreciate.
Government regulation in the form of subsidies, tariffs, licensing, and inspections does which of the following?
(a) Creates rents for businesses (b) Offers profits to some businesses at the expense of others (c) Encourages the inefficient use of productive resources (d) All of the above
An economic expansion causes
a. the federal budget deficit to rise. b. federal government tax receipts to fall. c. federal government spending to rise. d. transfer payments to fall. e. transfer payments to rise.
Natural resources include both plants and animals
Indicate whether the statement is true or false