If the Price Index Is P₁ in One Year and P₂

question 1

Multiple Choice

If the price index is P₁ in one year and P₂ in the next year,the inflation rate from one year to the next is calculated as

• A)(P₂ - P₁)× 100.
• B)(P_2/P₁)× 100.
• C)(P_1/P₂)× 100.
• D)[(P₂ - P₁)/P₁] × 100.
• E)[(P₁ - P₂)/P₂] × 100.

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Definitions:

Proprietary Fund

A type of governmental accounting fund used to account for activities that are similar to those found in the private sector, where the intent is to recover costs through user charges.

Financial Statement

Documented records summarizing a business's financial condition and operations over a period.

Statement of Net Position

A financial statement detailing an entity's assets, liabilities, and net position at a particular point in time, providing a snapshot of financial health.