Welfare Payments Are Indexed for Inflation Using the CPI

Multiple Choice

Welfare payments are indexed for inflation using the CPI. A recent newspaper editorial claimed that welfare recipients are harmed by years of low inflation because they do not receive as large an increase in their payments as they do in years of high inflation. Is the newspaper editorial correct?

A) The newspaper editorial is correct.
B) The newspaper editorial is correct if the market basket consumed by welfare recipients is the same as the market basket used to compute the CPI.
C) The newspaper editorial is correct if the prices of the goods consumed by welfare recipients increase faster than the prices of the goods in the market basket used to compute the CPI.
D) The newspaper editorial is correct if the prices of the goods consumed by welfare recipients increase slower than the prices of the goods in the market basket used to compute the CPI.