Which statement is true about the Consumer Price Index (CPI)?
A) The CPI helps organizations in the product markets decide an upper limit on the pay they will offer.
B) Following and studying changes in the CPI helps employers prepare for changes in the demands of the labor market.
C) The CPI helps organizations lure top-quality employees.
D) The CPI helps control labor markets' demand for pay increases.
E) The CPI helps organizations to compete with companies in other industries that hire similar employees.

Question

Quizplus · Accepted Answer

Following and studying changes in the Consumer Price Index (CPI) helps employers prepare for changes in the demands of the labor market because the CPI measures changes in the price level of a market basket of consumer goods and services purchased by households. This information can be used by employers to anticipate changes in the cost of living and, therefore, changes in wage demands.

Which Statement Is True About the Consumer Price Index (CPI)