Employing a Fixed-Weight Index Like the Consumer Price Index to Adjust

question 94

Multiple Choice

Employing a fixed-weight index like the Consumer Price Index to adjust a person's salary in response to inflation will overcompensate this person because doing so will allow this person to

• A) buy the same bundle of goods as he did before the inflation.
• B) achieve a higher level of utility than he did before the inflation.
• C) achieve the same level of utility as before the inflation.
• D) buy more of all goods.

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