What Does the Consumer Price Index Measure

question 3

Multiple Choice

What does the consumer price index measure?

• A)The average price of a good over five years
• B)The change in nominal prices of goods and services
• C)The change in the value of a currency
• D)The change in the average price level in the economy

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Definitions:

Flexible Budget

A dynamic budget that changes according to the business activity levels, offering a more adaptable financial planning tool.

Level of Activity

A measure of the volume of production or operations, often influencing cost behavior and used to allocate fixed costs to units of product.

Revenue Variance

The difference between the actual revenue earned and the budgeted or expected revenue.

Static Planning Budget

A budget based on a single level of output, not adjusted for changes in activity levels.