If the Price Index for a Particular Year Is 75

question 117

Multiple Choice

If the price index for a particular year is 75, it implies that ________.

• A) prices have increased by 7.5% over the base year
• B) prices have increased by 0.75% over the base year
• C) prices have decreased by 0.25% compared to the base year
• D) prices have decreased by 25% compared to the base year

---

Definitions:

Taxable Income

Income subject to tax, computed by deducting allowable deductions from gross income.

Book Income

The income reported by a business according to accounting principles, before taxation.

Permanent Difference

A discrepancy between the book income and taxable income that is not temporary and will not reverse in the future, affecting the company's tax and financial reporting differently.

Book Income

The income reported by a company in its financial statements according to the applicable accounting rules, which may differ from taxable income.