The Consumer Price Index (CPI)_____ Inflation Because It Includes an Item

question 3

Multiple Choice

The consumer price index (CPI) _____ inflation because it includes an item in the market basket only after the product becomes _____.

• A)overstates;unpopular
• B)overstates;obsolete
• C)overstates;widely used
• D)understates;widely used
• E)understates;obsolete

---

Definitions:

Avoidable Expenses

Costs that can be eliminated if a particular decision is made, such as discontinuing a product or service.

Fixed Manufacturing Expenses

Fixed expenses that are not affected by changes in production or sales quantities, like rent, salaries, and insurance.

Fixed Selling Expenses

Costs associated with the selling process that do not vary with sales volume, such as salaries of sales staff and advertising fees.

Net Operating Income

Net Operating Income, or NOI, is a measure of a company's profitability from its regular, core business operations, excluding expenses like interest and taxes.