Which of the Following Is Correct

question 134

Multiple Choice

Which of the following is correct?

• A)The GDP deflator is better than the CPI at reflecting the goods and services bought by consumers.
• B)The CPI is better than the GDP deflator at reflecting the goods and services bought by consumers.
• C)The GDP deflator and the CPI are equally good at reflecting the goods and services bought by consumers.
• D)The GDP deflator is more commonly used as a gauge of inflation than the CPI is.

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Definitions:

Unrecognized Net Gain

A profit that has been realized but not yet recorded in the financial statements of a company.

Projected Benefit Obligation

The present value of estimated future pension benefits owed to employees, based on expected salary increases.

Prior Service Cost

Costs that arise when a pension plan is amended to increase benefits for employee service provided in prior periods, recognized over the service periods of affected employees.

Unrecognized Prior Service Cost

Costs associated with retroactive benefits granted in pension plans, which are not immediately recognized as an expense but are amortized over time.