The Consumer Price Index Is Designed to Measure the Extent

question 188

Multiple Choice

The consumer price index is designed to measure the extent to which

• A) the cost of a typical bundle (market basket) of consumer goods has changed over time.
• B) consumers have increased their spending over time.
• C) GDP is allocated to consumers, rather than to business or government, over time.
• D) prices paid by employers to resource owners have changed over time.

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Definitions:

Operating Expenses

Costs incurred during the normal operations of a business, excluding costs related to the production of goods or services.

Direct Method

A cash flow statement preparation approach that lists major categories of gross cash receipts and payments.

Depreciation Expense

The methodical distribution of the expense of a physical asset over its estimated life span.

Prepaid Expenses

Payments made for goods or services to be received in the future; recognized as assets on the balance sheet until the benefit of the goods or services is realized.