One Reason the CPI Is Monitored Very Closely by Government,businesses,and

question 149

Multiple Choice

One reason the CPI is monitored very closely by government,businesses,and workers is that:

• A)It indicates whether we are running a budget surplus or a deficit.
• B)Some wages,interest rates,tax rates,and government benefits are tied to changes in the value of the CPI.
• C)It is the best measure of worker productivity in the service sector.
• D)The gross domestic product is computed from the reported increases in the CPI.

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Definitions:

U.S. Government Securities

Financial instruments issued by the United States Department of the Treasury to finance government spending and obligations, considered low-risk investments.

Excess Reserves

The capital reserves held by a bank or financial institution in excess of what is required by regulators, central bank, or other financial authority.

Actual Reserves

The total reserves held by a bank, consisting of both required reserves and any excess reserves not needed to meet central bank requirements.

Discount Rate

The Discount Rate is the interest rate set by central banks at which financial institutions can borrow reserves, influencing monetary policy and the money supply.