If 51 Percent of All Goods in the Consumer Price

question 11

Multiple Choice

If 51 percent of all goods in the consumer price index (CPI) became more expensive and 49 percent became cheaper

• A) inflation would certainly occur.
• B) deflation would most likely occur.
• C) inflation or deflation could occur,depending on the weight of these goods in the basket of goods and the actual percentage changes.
• D) deflation would certainly occur if the price of housing was one of the goods that fell.
• E) inflation would occur if the goods whose prices increased did so by the same percentage as the goods whose prices decreased.

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Definitions:

Excess Cash

The amount of cash holdings that exceed the normal operational needs of a company.

Reverse Split

A corporate action which consolidates the number of existing shares of stock into fewer, proportionately more valuable, shares.

Shares Outstanding

Shares outstanding refers to the total number of shares of a company's stock that are currently owned by all its shareholders, including share blocks held by institutional investors and restricted shares owned by the company’s officers and insiders.

Long-Term Payout Ratio

The proportion of earnings paid out as dividends to shareholders over an extended period, often used as a measure of a company's dividend policy stability.