The Bank of Canada Uses a "Core" Price Index, One

question 247

Multiple Choice

The Bank of Canada uses a "core" price index, one that excludes food and energy prices, to measure inflation.It does so because

• A)food and energy are inelastic goods and consumers will buy them regardless of their price.
• B)it wants to avoid the blame for high gasoline prices causing inflation.
• C)food and energy prices have wide swings that are not related to the causes of general inflation.
• D)food and energy prices do not change all that much during the short run, so are irrelevant to the calculation of inflation.
• E)food and energy make up a very small portion of the spending done by Canadian households.

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Definitions:

Straight-Line Method

A depreciation technique that allocates an equal amount of depreciation expense for a tangible asset over each year of its useful life.

Units-Of-Production

Units-of-production is a method of depreciation that allocates the cost of an asset over its useful life based on the number of units it produces, reflecting wear and use more accurately.

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the decrease in value due to use and time.

Salvage Value

The predicted sale value of an asset at the end of its operational life.