If the Nominal Price of Apples Has Increased by 20

question 20

Multiple Choice

If the nominal price of apples has increased by 20 percent over a year in which the average price level has risen by 10 percent,then the real price of apples:

• A)has increased.
• B)has stayed the same.
• C)has decreased.
• D)cannot be determined without further information.

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Definitions:

Operating Section

Part of an income statement that discloses revenues and expenses related directly to the core business operations.

Direct Method

A cash flow statement approach that lists major payments and receipts within operating activities directly.

Noncash Accounts

Accounts that represent transactions not involving physical cash, such as depreciation, amortization, or accruals.

Direct Method

A cash flow statement preparation approach that lists major operating cash receipts and payments, providing a clearer view of cash flow sources and uses.