Which of the Following Formulas Gives You the Growth in Purchasing

question 102

Multiple Choice

Which of the following formulas gives you the growth in purchasing power?

• A)growth of money + growth of prices
• B)(1 + real rate)/ (1 + nominal rate)
• C)(1 + inflation rate)/ (1 + nominal rate)
• D)growth of money / growth of prices
• E)growth of money × growth of prices

---

Definitions:

Assets

Resources owned or controlled by a business that are expected to bring future economic benefits.

Accrual Basis

An accounting method where transactions are recorded when they occur, regardless of when cash is exchanged, focusing on economic events rather than cash flow.

Ledger

A book or collection of financial accounts where double-entry bookkeeping transactions are recorded, including assets, liabilities, revenue, and expenses.

Updating

The act of revising or refreshing information to reflect the most current data available.