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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If the economy is currently in a recessionary gap, the SRAS curve intersects the AD curve to the left of Natural Real GDP
Indicate whether the statement is true or false
________ is a problem that occurs when one concludes that a change in variable X caused a change in variable Y when in actual fact, it is a change in variable Y that caused a change in variable X
A) The omitted variable B) The positive-to-negative relationship C) Reverse causality D) Nonlinear slope