Suppose a Price Index for a Certain Basket of Goods

question 34

Multiple Choice

Suppose a price index for a certain basket of goods and services has a value of 150 in 2018 and a value of 156 in 2019.This index suggests that the cost of the market basket of goods and services

• A)was 4% higher in 2019 than in 2018.
• B)was 6% lower in 2019 than in 2018.
• C)was 6% higher in 2019 than in 2018.
• D)was 156% higher in 2019 than in 2018.
• E)was approximately the same in 2019 and 2018.

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Definitions:

Receivable Turnover

A financial metric indicating how quickly a company collects payments owed from its customers, often measured over a year.

Inventory Turnover

A financial ratio that measures how frequently a company sells and replaces its inventory over a specific period.

Current Ratio

A metric assessing a business's ability to handle its due within one-year obligations, obtained by the ratio of current assets to current liabilities.

Performance Comparison

The process of comparing the actual performance of an individual, group, or process against set standards or expectations.