If This Year the CPI Is 110 and Last Year

question 10

Multiple Choice

If this year the CPI is 110 and last year it was 100, then

• A) the cost of the CPI basket of goods and services has increased this year by 110 percent.
• B) the price level as measured by the CPI has increased by 10 percent.
• C) the inflation rate for this year has increased by 10 percent over last year's inflation rate.
• D) All of the above are correct.

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Definitions:

360-Day Year

An accounting convention that simplifies interest calculation by assuming all months have 30 days, resulting in a 360-day year.

Interest Charged

The cost incurred for borrowing money or the amount earned on deposited funds, usually expressed as a percentage of the principal.

Contingent Liability

A potential financial obligation that may arise depending on the outcome of a future event.

Contingent Liabilities

Liabilities that may arise from past transactions if certain events occur in the future.