The CPI Is More Commonly Used as a Gauge of Inflation

question 1

Multiple Choice

The CPI is more commonly used as a gauge of inflation than the GDP deflator is because

• A)the CPI is easier to measure.
• B)the CPI is calculated more often than the GDP deflator is.
• C)the CPI better reflects the goods and services bought by consumers.
• D)the GDP deflator cannot be used to gauge inflation.

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Definitions:

Decreases

A reduction in the quantity, level, or intensity of something, such as expenses, assets, or liabilities.

Prepaid Insurance

An asset account that represents insurance payments made in advance for coverage extending beyond the current accounting period.

Accounts Payable

Amounts owed by a business to its suppliers shown as a liability on a company’s balance sheet and typically due within a short period of time, often 30 to 90 days.

Equipment

Tangible assets used in the operations of a business, not intended for sale, and depreciated over time.