Author Question: Which of the following would be a consequence of substitution bias in the CPI? A) Judges would ... (Read 65 times)

jazziefee · **on:** Jun 29, 2018

Which of the following would be a consequence of substitution bias in the CPI?

A) Judges would award child support payments that would not adequately keep up with the true cost of inflation.
B) Businesses would overcompensate employees for inflation when giving cost of living raises.
C) Social Security payments would not adequately compensate retired workers for inflation.
D) The inflation rate based on the CPI would underestimate the true level of inflation.

Question 2

Refer to Scenario 25-1. M2 in this simple economy equals

A) 3,000. B) 8,000. C) 14,000. D) 21,000.