7. The chapter explains that Canada Pension Plan benefits are increased each year in proportion to the increase in the CPI, even though most economists believe that the CPI overstates actual inflation.

a. If the elderly consume the same market basket as other people, does the Canada Pension Plan provide the elderly with an improvement in their standard of living each year? Explain.

b. In fact, the elderly consume more medicine than younger people, and medicine costs have risen faster than overall inflation. What would you do to determine whether the elderly are actually better off from year to year?