The CPI is used for calculating payments from the U.S.government to individuals.To the extent that it is biased upward, which of the following is likely to occur?
I.It leads to the payment of lower benefits than would be the case if the index accurately measures inflation.
II.It leads to the payment of higher benefits than would be the case if the index accurately measures inflation.
III.It raises government expenditures.
IV.It lowers government expenditures.

Question

Quizplus · Accepted Answer

If the CPI is biased upward, it overstates inflation, leading to higher benefit payments and increased government expenditures.

The CPI Is Used for Calculating Payments from the U