Which of the Following Prices Will Be Used When Calculating

question 61

Multiple Choice

Which of the following prices will be used when calculating the rate of growth of real GDP between the years 2010 and 2011 using the chain method?

• A) Prices in 2010, 2011, and in 2009 (the base year).
• B) Prices in 2005.
• C) Prices in 2011.
• D) The average of prices in 2010 and 2011.
• E) Prices in the base year (2009).

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Definitions:

Periodic Inventory System

An inventory accounting system where updates to inventory levels are made periodically, usually at the end of a financial reporting period, as opposed to continuously.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including material, labor, and overhead expenses.

Beginning Inventory

The worth of merchandise on hand ready to be sold at the beginning of a financial period.

Merchandise Purchases

Transactions involving the buying of goods for resale purposes, typically in a retail or wholesale setting, which will either be sold as is or used in the production process.