The CPI Does a Better Job Than the GDP Deflator

question 57

Multiple Choice

The CPI does a better job than the GDP deflator at measuring changes in the

• A) cost of living as experienced by the typical household.
• B) standard of living as experienced by the typical household.
• C) the price level for the whole economy.
• D) the price level for corporations.

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Definitions:

Interest Expense

The cost incurred by an entity for borrowing money, typically expressed as an annual rate applied to the borrowed principal.

Tax Rate

The percentage of income or value of a transaction that is paid to the government as tax.

Retention Ratio

A metric that shows the percentage of net income retained in the company rather than paid out as dividends to shareholders.

Debt-Equity Ratio

The quotient representing a company's use of debt over equity, obtained by dividing its liabilities total by shareholder equity.