An example of indexing is a "cost of living" adjustment clause in a wage contract

Refer to the scenario above. Which of the following statements is true about the model's prediction?

A) The prediction can be applied to estimate the returns only for a limited number of years of additional education. B) The prediction is an approximate relationship and may not hold for everyone. C) The prediction cannot be verified empirically. D) The prediction is precise, exact, and accurate for the entire population.

Which of the following will most likely have the greatest effect on an individual’s consumption function?

A. Winning a small amount in the lottery B. A one-time tuition grant C. A week of high overtime pay D. An inheritance paying a modest annual dividend