Welfare Payments Are Indexed for Inflation Using the CPI

question 51

Multiple Choice

Welfare payments are indexed for inflation using the CPI. A recent newspaper editorial claimed that welfare recipients are harmed by inflation as it is measured by the CPI. Is the newspaper editorial correct?

• A) The newspaper editorial is correct if the price of the basket consumed by welfare recipients increases faster than the price of the CPI basket.
• B) The newspaper editorial is correct if the price of the basket consumed by welfare recipients increases slower than the price of the CPI basket.
• C) The newspaper editorial is correct if the prices of the goods consumed by welfare recipients are cheaper than the goods in the CPI basket.
• D) The newspaper editorial is correct if the prices of the goods consumed by welfare recipients are more expensive than the goods in the CPI basket.

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Definitions:

Bad News Messages

Communications that convey unfavorable or negative information to the recipient, often requiring careful wording to maintain goodwill.

Whistle-Blowing

Efforts by employees to report concerns about unethical or illegal behavior.

Illegal Behavior

Actions or activities that violate laws or regulations.

Ethical Behavior

Acting in ways consistent with what society and individuals typically think are good values, involving honesty, fairness, and integrity.