Consider Canada's GDP Deflator and Consumer Price Index (CPI)

question 41

Multiple Choice

Consider Canada's GDP deflator and Consumer Price Index (CPI) .Now suppose the prices of the following goods and services increased.Which is likely to have a larger direct effect on the CPI than the GDP deflator?

• A)consumer electronics
• B)lumber
• C)car parts
• D)aircraft engines
• E)engineering services

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Definitions:

Plowback Ratio

The proportion of earnings retained by a business, rather than distributed to its shareholders as dividends, to reinvest in the core business or to pay debt.

Dividend Policy Decision

The strategy that a company uses to determine the size and timing of its dividends payments to shareholders.

Capital Intensity Ratio

A financial metric that measures the amount of capital needed per dollar of revenue; used to evaluate the investment intensity of a business's operations.

Fixed Asset Turnover Ratio

A financial metric that measures how efficiently a company uses its fixed assets to generate sales, calculated by dividing net sales by average fixed assets.