The Assumption That Dollars Will Buy the Same Quantity of Goods

question 69

Multiple Choice

The assumption that dollars will buy the same quantity of goods and services today as they would have five years ago is the:

• A) revenue recognition principle.
• B) time period assumption.
• C) separate entity assumption.
• D) unit-of-measure assumption.
• E) continuity assumption.

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Definitions:

Price

The financial value forecasted, demanded, or handed over as compensation for an item.

Quantity

The amount or number of a material or immaterial good that is considered as a unit or an aggregate.

Price Ceiling

A legal maximum price set by government on certain goods or services, intended to prevent prices from becoming too high.

Deadweight Loss

The loss of economic efficiency that occurs when the equilibrium for a good or a service is not achieved, leading to a misallocation of resources.