How costly are biases in the Consumer Price Index (CPI)?
What will be an ideal response?
Each year the federal government increases Social Security payments to the elderly by the rate of increase of prices as measured by the CPI. Economists believe that the CPI overstates actual price increases by between 0.5% and 1.5% a year. If we assume that the figure is 1%, and use the estimates provided by the Congressional Budget Office, reducing Social Security payments by 1% would save 42 billion dollars over a five-year period!
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Tying is a form of price discrimination in which one good called the ____ is tied to a second good called the ____.
Fill in the blank(s) with the appropriate word(s).
The share of U.S. personal saving in contractual form is ________, which helps ________ the effectiveness of stabilization policy
A) growing, enhance B) growing, undermine C) shrinking, enhance D) shrinking, undermine