An Increase in the Quality of Items Included in the Consumer

question 6

Multiple Choice

An increase in the quality of items included in the Consumer Price Index would cause the index to

• A)overstate the true amount of unemployment.
• B)overstate the true amount of inflation.
• C)understate the true amount of unemployment.
• D)understate the true amount of inflation.

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Definitions:

GAAP

Generally Accepted Accounting Principles, a common set of accounting rules and standards for financial reporting.

Material Departure

A significant deviation or divergence from expected, customary, or defined standards or practices, often in financial reporting or auditing.

SEC

The Securities and Exchange Commission, a U.S. government agency responsible for regulating the securities markets and protecting investors.

Accounting Principles

Accounting principles are the rules and guidelines that companies must follow when reporting financial data.