One Reason the CPI Is Monitored Very Closely by Government

question 20

Multiple Choice

One reason the CPI is monitored very closely by government, businesses, and workers is that

• A) it indicates whether we are running a budget surplus or a deficit.
• B) some wages, interest rates, tax rates, and government benefits are tied to changes in the value of the CPI.
• C) it is the best measure of worker productivity in the service sector.
• D) the gross domestic product is computed from the reported increases in the CPI.

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Definitions:

Insurance Premiums

Payments made to insurance companies to provide coverage for certain risks, such as property damage or liability.

Direct Costs

Expenses that can be directly attributed to the production of specific goods or services, such as raw materials and direct labor.

Liability Insurance

An insurance policy that provides protection against claims resulting from injuries and damage to people and/or property.

Merchandising Firm

A business that purchases finished goods for resale, making profit through the markup of those goods.