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If There Is a 5 Percent Increase in the CPI

Question 85

Multiple Choice

If there is a 5 percent increase in the CPI, then there will most likely be


A) a 5 percent rise in the cost of living.
B) a less than 5 percent rise in the cost of living because of consumers substituting away from goods whose relative prices rise towards other goods.
C) a more than 5 percent rise in the cost of living because of consumers substituting away from goods whose relative prices rise towards other goods.
D) a less than 5 percent rise in the cost of living because of falling quality of goods over time.
E) a more than 5 percent rise in the cost of living because of the introduction of new goods.

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