In Which of the Following Situations Would a Worker Have

question 126

Multiple Choice

In which of the following situations would a worker have the greatest real income?

• A) She receives a pay cut and her nominal wage falls by 5 percent,while the CPI falls by 20 percent.
• B) She receives a pay cut and her nominal wage falls by 5 percent,while the CPI increases by 10 percent.
• C) Her nominal wage remains the same,as does the CPI.
• D) She receives a raise and her nominal wage increases by 5 percent,while the CPI increases by 10 percent.
• E) She receives a raise and her salary increases by 5 percent,while the CPI falls by 5 percent.

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Definitions:

Periodic system

An inventory accounting system in which updates to inventory levels and cost of goods sold are made at the end of an accounting period rather than after each sale.

Ending inventory

The aggregate worth of products ready for sale at the close of an accounting period, determined by summing up acquisitions to the initial inventory and deducting the cost of goods sold.

Cost flow assumption

An accounting method that determines how costs are allocated to inventory and cost of goods sold, such as FIFO, LIFO, or weighted average.

Gross profit

The difference between sales revenue and the cost of goods sold before accounting for operating expenses, interest, taxes, etc.