The Problems with Using the Consumer Price Index as a Measure

question 6

Multiple Choice

The problems with using the consumer price index as a measure of the cost of living are important because

• A)even the appearance of high rates of inflation cause voters to become disenchanted.
• B)politicians have manipulated the measurement problems to their advantage.
• C)many government programs use the CPI to adjust for changes in the overall level of prices.
• D)if the price level is overstated,consumers will be taken advantage of by sellers of consumer goods.

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Definitions:

Consolidated Balance Sheet

A balance sheet that presents the assets, liabilities, and equity of a parent company and its subsidiaries as one entity, after eliminating inter-company transactions.

Deferred Income Tax Asset

A Deferred Income Tax Asset is an accounting term for items that reduce future tax payments due to temporary differences between the financial statement carrying amount and the tax basis of assets and liabilities.

Consolidated Income Tax

Income tax accounting that includes all income, exemptions, and credits of a consolidated group of companies.

Inventory

The raw materials, work-in-progress products, and finished goods that a company holds for the purpose of sale in the near future.