The Measure of the Average Change in Prices Over Time

question 144

Multiple Choice

The measure of the average change in prices over time in a fixed "market basket" of goods and services is known as

• A)cost-of-living allowance.
• B)cost-of-living adjustment.
• C)the consumer price index.
• D)the inflation index.

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Definitions:

Present Value

The current financial evaluation of receiving a sum of money or series of payments in the future, discounted by a pre-determined return rate.

Discount Rate

The interest rate used to discount future cash flows to their present value, often used in capital budgeting.

Future Cash Flows

Projected cash payments or receipts over a future period, crucial for evaluating investments and financial planning.

Rate of Return

The upward or downward movement in the value of an investment through a given timeframe, expressed as a percentage of the investment's initial cost.