Question

Social Security benefits are increased each year in proportion to the increase in the CPI, even though most economists believe that the CPI overstates actual inflation. True or False: If the elderly consume the same market basket as other people, then Social Security would have an uncertain impact on their standard of living. True False Healthcare costs have risen faster than overall inflation. True or False: If the elderly consume a market basket that includes more healthcare than other people, they may be worse off even if Social Security benefits are adjusted for inflation. True False

Answer 1

Statement A is True

If the elder people also consume the same goods and services as that of other people, Social security will increase as because CPI will overstate inflation and social security will also move according to it.

Statement B is False

Elderly people consume more of healthcare products and it is true, and it will not reflect the the social security, as no inflation will occur, because these goods are already consumed by elderly population.