The Consumer Price Index Measures Inflation by Using

question 116

Multiple Choice

The Consumer Price Index measures inflation by using

• A)all goods and services that are produced using a current-year basket.
• B)all goods and services that are produced using a base-year basket.
• C)only consumption goods and services purchased using a current-year basket.
• D)only consumption goods and services purchased using a base-year basket.
• E)the goods and services produced in the base year and goods and services produced in the current year.

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Definitions:

Revenues

Income generated from normal business operations, often from the sale of goods and services to customers.

Expenses

Costs incurred by a business or individual in the process of earning revenue, ranging from utilities to salaries.

Drawing Account

An account used to record withdrawals made by an owner from the business for personal use.

Owner's Capital Account

An equity account that represents the owner's invested capital plus any retained earnings or minus any withdrawals.