The Measurement Problems in the Consumer Price Index as an Indicator

question 58

Multiple Choice

The measurement problems in the consumer price index as an indicator of the cost of living are important because

• A)even the appearance of high rates of inflation cause voters to become disenchanted.
• B)politicians have manipulated the measurement problems to their advantage.
• C)many government programs use the CPI to adjust for changes in the overall level of prices.
• D)if the price level is overstated, consumers will be taken advantage of by sellers of consumer goods.

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Definitions:

Acquisition Differential

The excess of the cost of acquisition over the fair value of the net assets acquired in a business combination, often attributed to intangibles like goodwill.

Fair Value Enterprise Method

A valuation method that estimates the value of an entire enterprise as if it were traded in a fair and open market.

Non-Controlling Interest

A share in the equity of a subsidiary not owned by the parent company, also known as minority interest.

Control Premium

An additional amount paid over the fair market value for a controlling interest in a company.