In Computing the Consumer Price Index, a Base Year Is

question 36

Multiple Choice

In computing the consumer price index, a base year is chosen. Which of the following statements about the base year is correct?

• A) The base year is always the first year among the years for which computations are being made.
• B) It is necessary to designate a base year only in the simplest case of two goods; in more realistic cases, it is not necessary to designate a base year.
• C) The value of the consumer price index is always 100 in the base year.
• D) All of the above are correct.

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Definitions:

Salaries

Payments made to employees for their services, typically expressed in terms of annual amounts but paid in installments like weekly or monthly.

Capital Balances

The amount of money invested in a business by its owners or shareholders, shown on a company's balance sheet.

Net Income

The total profit of a company after all expenses have been deducted from revenue, indicating the company's financial performance in a given period.

Income Ratio

A financial metric comparing two aspects of a company's income, often used to assess financial health or operational efficiency.