Question

Some proponents of Social Security reform suggest adjusting Social Security payments using the Consumer Price Index (CPI) because:

A. the average wage index has historically grown at a faster rate than the CPI.

B. the average wage index has historically grown at a slower rate than the CPI.

C. beneficiary payments are not currently adjusted for cost of living increases.

D. the average wage index has historically grown at the same rate as the CPI.

Answer 1

Solution-

Some proponents of Social Security reform suggest adjusting Social Security payments using the Consumer Price Index (CPI) because: the average wage index has historically grown at a slower rate than the CPI

The correct option is B. the average wage index has historically grown at a slower rate than the CPI

Reason-

Some proponents of entitlement-program reform suggest indexing Social Security benefits to the consumer price index (CPI) rather than to the average wage index, because CPI historically grows at a faster rate, which would mean benefit payments would grow at a faster rate.