Richard receives government transfer payments and currently consumes 5 guns and 6 goose livers.Assume the price of guns decreases by 10% and the price of goose liver increases by 20%.The government raises Richard's transfer payments so he can still afford 5 guns and 6 goose livers.Does this constitute a true cost-of-living adjustment (COLA)?
A) No. Richard is overcompensated.
B) No. Richard is undercompensated.
C) Yes. The payment just achieves the right level of compensation.
D) Not enough information.

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The Answer of Richard receives government transfer payments and currently consumes 5 guns and 6 goose livers.Assume the price of guns decreases by 10% and the price of goose liver increases by 20%.The government raises Richard's transfer payments so he can still afford 5 guns and 6 goose livers.Does this constitute a true cost-of-living adjustment (COLA)?
A) No. Richard is overcompensated.
B) No. Richard is undercompensated.
C) Yes. The payment just achieves the right level of compensation.
D) Not enough information.

Richard Receives Government Transfer Payments and Currently Consumes 5 Guns