According to neoclassical theory, compensating consumers for inflation as measured by a base year weighted index can overcompensate them because: A some goods may be inferior B relative prices may not have changed C some goods may give disutility D goods are substitutable in consumer preferences

According to neoclassical theory, compensating consumers for inflation as measured by a base year weighted index can overcompensate them because: A some goods may be inferior B relative prices may not have changed C some goods may give disutility D goods are substitutable in consumer preferences

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter26: The Neoclassical Perspective

Section: Chapter Questions

Problem 19CTQ: Economists from all theoretical persuasions criticized the American Recovery and Reinvestment Act....

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Question

According to neoclassical theory, compensating consumers for inflation as measured by a base year weighted index can overcompensate them because:

A some goods may be inferior

B relative prices may not have changed

C some goods may give disutility

D goods are substitutable in consumer preferences

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