The Consumer Price Index Is Not an Accurate Measure of the Cost

question 6

Multiple Choice

The consumer price index is not an accurate measure of the cost of living because:

• A) it measures the goods and services bought by all urban households.
• B) it is made up of a weighted average of prices.
• C) it is made up of a variable basket of goods and services.
• D) it does not fully account for changes in the quality of products.

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Definitions:

Capital Account Balance

The net result of public and private international investments flowing in and out of a country, reflecting changes in ownership of national assets.

Net Income

The amount of profit a company generates after all expenses, taxes, and costs have been subtracted from total revenue.

Withdrawals

Amounts of money taken out from a business by its owner(s) for personal use.

Provision

An amount set aside in the accounts of a company to cover a future liability or decrease in the value of an asset.