Improvements in the Quality of Consumer Goods and Services Over

question 23

Multiple Choice

Improvements in the quality of consumer goods and services over time

• A) cause inflation as measured by the CPI to overstate the actual inflation rate
• B) cause inflation as measured by the CPI to understate the actual inflation rate
• C) are accounted for in the CPI
• D) are insignificant and thus would not affect the CPI even if accounted for
• E) improve the accuracy and consistency of the market basket

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Definitions:

Liability Insurance Policy

A financial product that provides the insured party with protection against claims resulting from injuries and damage to people and/or property.

Prepaid Expense

Expenses paid in advance for goods or services to be received in the future, recorded as assets on the balance sheet until they are actually consumed.

Insurance Expense

The cost recognized in the accounting period related to the premiums paid for insurance policies.

Retained Earnings

Profits that a company keeps after dividends are paid to shareholders, used for reinvestment in the business or to pay off debt.