If This Year's Price Level Is 126 and Last Year's

question 260

Multiple Choice

If this year's price level is 126 and last year's price level was 120, the inflation rate is .

• A) 6 percent a year
• B) 0.95 percent a year
• C) 5 percent a year
• D) 1.05 percent a year

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Definitions:

Fixed Costs

Costs that do not change with the level of output or sales, such as rent, salaries, and insurance premiums, over a specified period.

Revenue

The total amount of money received by a company for goods sold or services provided during a specific period.

Effective Capacity

The capacity a firm can expect to achieve, given its product mix, methods of scheduling, maintenance, and standards of quality.

Operating Constraints

Limitations or restrictions that affect the performance or output of a process or system.