If Mustard Now Costs $0

question 115

Multiple Choice

If mustard now costs $0.75 when today's price index is 225,and if the price index in 1970 was 38,we would most accurately say that

• A) mustard cost about $4.44 in 1970.
• B) if mustard cost $0.10 in 1970,it was relatively cheap as an inflation-adjusted price.
• C) mustard cost about $0.20 in 1970.
• D) mustard's price would never increase at the same rate as inflation because it is a food item.
• E) ketchup would cost about $0.13 in 1970 because it typically costs about the same as mustard.

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Definitions:

Fair Value Method

The Fair Value Method is an accounting strategy used to value certain assets and liabilities at their current market worth, not based on purchase costs or book value.

Unrealized Gains

Profits that have been achieved on paper from an investment but have not yet been realized through a transaction.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, culminating in the net income or loss for the period.

Fixed Assets

Long-term tangible assets used in operations, such as buildings and machinery, not expected to be converted to cash within a year.