Which of the Following Formulas Is Used to Calculate the Inflation

question 101

Multiple Choice

Which of the following formulas is used to calculate the inflation rate?

• A) inflation rate = 100 × \(\left( \frac { \text { CPI in current year } } { \text { CPI in baseperiod } } \right)\)
• B) inflation rate = 100 × \(\left( \frac { \text { CPI in prev ious year } } { \text { CPI in current year } } \right)\)
• C) Inflation rate = 100 × \(\left( \frac { \text { CPI in current year - CPI in prev ious year } } { \text { CPI in previous year } } \right)\)
• D) Inflation rate = 100 × \(\left( \frac { \text { CPI in previous year - CPI in current year } } { \text { CPI in current year } } \right)\)
• E) inflation rate = 100 × \(\left( \frac { \text { CPI in base year } } { \text { CPI in current year } } \right)\)

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Definitions:

Consolidated Income Tax Return

A single income tax return filed by a parent company and its subsidiaries, considered as one entity for tax purposes.

Intra-entity Transfers

Transfers of goods, services, or assets between divisions or units within the same company.

Voting Stock

Shares that give the shareholder the right to vote on matters of corporate policy and the election of the board of directors.

Foreign Corporation

A company that is incorporated under the laws of a country different from the country of its primary operations.