What Is the Difference Between the CPI and the GDP

question 72

Multiple Choice

What is the difference between the CPI and the GDP chain index?

• A) The CPI includes capital goods but the chain index does not.
• B) The CPI basket includes more goods and services than the GDP chain index basket.
• C) The CPI includes a fixed basket of goods while the chain index does not.
• D) The CPI measures price changes while the GDP chain index measures production changes.

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Definitions:

Weighted-Average Method

An inventory costing method that calculates the cost of goods sold and ending inventory based on the average cost of all units available.

LIFO

"Last In, First Out," an inventory valuation method where the last items placed in inventory are the first ones sold.

Ending Inventory

The final value of goods available for sale at the end of an accounting period, calculated as beginning inventory plus purchases minus cost of goods sold.

Income Statement

A financial document outlining a company's revenue, expenses, and profits over a specific period, showing its ability to generate earnings.