The Table Below Shows the Price Index for China Starting

question 268

Multiple Choice

The table below shows the price index for China starting in 2000. $$\begin{array} { | l | l | } \hline \text { Year } & \text { Price Index } \\\hline 2000 & 100.0 \\\hline 2001 & 100.73 \\\hline 2002 & 99.95 \\\hline 2003 & 101.12 \\\hline 2004 & 105.06 \\\hline 2005 & 106.95 \\\hline 2006 & 108.52 \\\hline\end{array}$$
Which of the following statements correctly describe the behavior of prices in China?

• A) The inflation rate between 2005 and 2006 was 14.4 percent.
• B) China experienced a high price level and high inflation.
• C) Inflation reached 73% between the base year and 2001.
• D) The cost of the CPI basket decreased in 2002.

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Definitions:

Contribution Margin

The amount by which a product's sales price exceeds its variable costs, contributing towards covering fixed costs and generating profit.

Financial Break-even

The point at which total revenues equal total costs, resulting in no profit or loss for the business.

Financial Break-even

The point at which total revenues are equal to total operating expenses and financial costs, meaning the company makes no profit but also incurs no loss.

Payback Period

The amount of time required for an investment to generate cash flows to recover its initial cost.