What Basket of Goods Is Used to Construct the CPI

question 57

Multiple Choice

What basket of goods is used to construct the CPI?

• A) a random sample of all goods and services produced in the economy
• B) the goods and services that are typically bought by consumers as determined by government surveys
• C) only food, clothing, transportation, entertainment, and education
• D) the least expensive and the most expensive goods and services in each major category of consumer expenditures

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Definitions:

State Sales Tax

A tax imposed by state governments on the sale of goods and services, which varies by state and is collected by businesses at the point of sale.

Sales Tax Payable

A liability account in the general ledger that stores the amount of sales tax collected from customers, which is owed to the government.

FOB Shipping Point

A term used in shipping agreements indicating that the buyer takes ownership and responsibility for goods once they are shipped, and is responsible for freight costs and risks.

Accounts Receivable

Outstanding balances due to a company from its clients for products or services rendered but still unpaid.