When Computing a Price Index, the Base Year Is

question 405

Multiple Choice

When computing a price index, the base year is

• A) the earliest year for which data are available.
• B) the year that is chosen as the point of reference for comparison of prices with other years.
• C) the most recent year for which data are available.
• D) the most recent year in which the inflation rate was close to zero.

---

Definitions:

Book Value

The net value of a company's assets found on its balance sheet, and calculated as total assets minus intangible assets (patents, goodwill) and liabilities.

Market Value

The current price at which an asset or service can be bought or sold in the market.

Total Assets

Represents the sum of all funds, properties, and assets owned by a company or individual at a given time.

Defensive Mergers

Mergers undertaken by companies to protect against potential threats, improve market position, or mitigate weaknesses.