If the Cost of a Market Basket Is $200 in Year

question 400

Multiple Choice

If the cost of a market basket is $200 in year 1 and $230 in year 2, the price index for year 2 using year 1 as the base is:

• A)100.
• B)115.
• C)130
• D)200.

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Definitions:

Accounts Receivable

Amounts receivable by a firm for goods or services rendered to customers, awaiting payment.

Fixed Asset Investment

The acquisition of long-term physical assets by a company to be used in its operations for generating income.

Depreciated

A decrease in the value of an asset over time, often due to wear and tear or obsolescence, recognized in accounting to allocate the cost of an asset over its useful life.

Salvage Value

The estimated residual value of an asset after it has completed its useful life and cannot be used for production.