Which of the Following Statements Is True of the CPI

question 118

Multiple Choice

Which of the following statements is true of the CPI?

• A) It uses the same basket of goods and services as the PPI.
• B) The quantities of items in the current year are used for computing the weights for the index.
• C) It is an unweighted price index used to measure inflation.
• D) It is based on the prices paid by urban consumers for a representative basket of goods and services.

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Definitions:

AFN Formula

Additional Funds Needed formula; a financial model that projects the additional financing required by a firm to support its desired level of growth.

Dividend Payout Ratio

The proportion of earnings a company pays to its shareholders in the form of dividends, typically represented as a percentage of the company’s net income.

External Financing

Funding obtained from sources outside the company, including bank loans, issuance of equity or debt, and other borrowing avenues.

Sales Forecast

An estimation of the sales a company expects to achieve over a certain period in the future.