If the Price Index Is P₁ in Year 1 and P₂

question 36

Multiple Choice

If the price index is P₁ in year 1 and P₂ in year 3,the average inflation rate per year over this period is calculated as

• A)(P₂ - P₁)× (100/2).
• B)[(P₂ - P₁)/P₁] × 100.
• C)[(P₂ - P₁)/P₁] × [100/2].
• D)[(P₁ - P₂)/P₂] × 100.
• E)[(P₁ - P₂)/P₂] × [100/2].

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Definitions:

Labor Standards

Benchmarks or norms established for the amount of labor required to perform a task efficiently, often used to set production targets and labor budgets.

Particular Product

A specific item or good offered for sale by a business.

Labor Rate Variance

The difference between the actual cost of labor and the expected (or budgeted) cost of labor based on standard rates and hours.

Labor Standards

Benchmarks or norms for the amount of labor time required to perform a certain task or produce a certain amount of goods.