If the Consumer Price Index Were 301 in 1983 and 311

question 37

Multiple Choice

If the consumer price index were 301 in 1983 and 311 in 1984 based on an index of 100 for 1967, then it could be concluded that

• A) inflation and prices were both high relative to 1967 inflation of about 4 percent and 1967 prices, respectively.
• B) inflation was high, relative to a comfortable rate of 4 percent, but prices were not especially high when the 15-year span from 1967 to 1983 is considered.
• C) inflation was low, relative to a comfortable rate of 4 percent, but prices were actually 311 percent higher than just 16 years before.
• D) inflation was low, relative to a comfortable rate of 4 percent, but prices were actually 211 percent higher than they were in 1967.
• E) none of the above.

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Definitions:

Return on Assets

A financial ratio that measures how effectively a company is using its assets to generate profit, typically expressed as a percentage.

Debt Ratio

Debt ratio is a financial ratio that measures the extent of a company’s leverage, calculated by dividing total liabilities by total assets.

Profit Margin

A financial ratio that shows the percentage of revenue that exceeds the costs of goods sold, indicating the profitability of a business.

Contra Account

An account used in the general ledger to reduce the value of a related account when the two are netted together.