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:

Book Value

The net value of a company's assets minus its liabilities, often used to estimate the value of a company if it were to be liquidated.

Vertical Acquisition

A corporate strategy where a company acquires another company that operates in the production process of the same industry, either as a supplier or distributor.

Conglomerate Acquisition

A type of corporate takeover where a large, multi-industry company acquires another business that may be in an unrelated industry.

Forward Acquisition

A strategy involving the purchase of a company with the aim of gaining access to its assets, technology, or market position in the future.