Related to the Economics in Practice on p. 133: The Consumer Price Index in the United States was 207.3 in 2007, 215.3 in 2008 and 214.5 in 2009. If a retiree's pension is tied to the CPI, her monthly pension check would have ________ from 2007 to 2008, and ________ from 2008 to 2009.
A) increased; increased
B) increased; decreased
C) decreased; increased
D) decreased; decreased

Question

Quizplus · Accepted Answer

Since the CPI increased from 2007 to 2008, the retiree's pension check would increase due to the tie to CPI. However, since the CPI decreased from 2008 to 2009, the retiree's pension check would decrease. Therefore, the answer is Option B, which indicates that the pension check increased in 2007 to 2008 and decreased in 2008 to 2009.

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