How Do You Convert a Price of a Good from an Earlier

question 38

Multiple Choice

How do you convert a price of a good from an earlier time into today's price?

• A) Take the earlier price and divide by today's price,then multiply by the ratio of the consumer price index (CPI)today to that of the CPI in the old year.
• B) Take the earlier price and multiply by the ratio of the earlier gross domestic product (GDP)deflator to today's consumer price index.
• C) Take today's price and divide by the earlier price in terms of the gross domestic product (GDP)deflator.
• D) Take the earlier price and multiply by the ratio of today's consumer price index (CPI)to the earlier CPI.
• E) Take the earlier price and multiply by the ratio of the earlier consumer price index (CPI)to the current CPI.

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Definitions:

Simple Contract

A contract that can be either oral or written, as opposed to a formal contract which requires a special form or method of creation.

Informal Contract

An oral or written contract that is not under a seal or is not a contract of record. Also called simple contract.

Quasi-Contract

An obligation imposed by the law to avoid injustice, even though no true contract exists between the parties.

Duty to Mitigate Damages

The legal principle requiring a party suffering loss as a result of a breach of contract to take reasonable action to minimize the financial harm.