If the Price Index Is 130,this Means That

question 175

Multiple Choice

If the price index is 130,this means that

• A) prices are 130% higher than in the base year.
• B) prices are 0.13 times higher than in the base year.
• C) prices are 30% higher than in the base year.
• D) nominal GDP must be inflated to determine the real GDP.
• E) prices are 30% lower than in the base year.

---

Definitions:

Ratio Analysis

A financial analytical technique that uses ratios (quantitative relationships) between financial statement items to assess a company's performance and condition.

Accounting Process

The sequence of procedures undertaken to record, summarize, and report financial transactions for a business entity.

Accrual Basis

An accounting method where revenue and expenses are recorded when they are earned or incurred, regardless of when the cash transaction occurs.

Double-entry Accounting

An accounting method that records each transaction twice, as both a debit and a credit, to ensure the accounting equation remains balanced.