If the Consumer Price Index (1982-1984 = 100) Is 237

question 14

Multiple Choice

If the Consumer Price Index (1982-1984 = 100) is 237.1, this means that:

• A) prices have increased 137.1 percent so that it now costs $237.10 to buy goods and services that cost $100 in 1982-1984.
• B) prices have increased 237.1 percent so that it now costs $337.10 to buy goods and services that cost $100 in 1982-1984.
• C) since 1982-1984 = 100, the current price is (1982-1984)/237.1 = 1898/237.1 = $8.00.
• D) a mistake has been made because 1982-1984 = 1,898 is much greater than 100.
• E) a mistake has been made because an index number can only take values between 0 and 1.

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Definitions:

Cumulative Preferred Stock

A type of preferred stock that accumulates unpaid dividends, which must be paid out before any dividends can be distributed to common stockholders.

Common Stock

A type of equity security that represents ownership in a corporation, giving holders voting rights and a share in the company's profits through dividends.

Dividend

A share of a company's profits distributed to its shareholders, usually paid in cash or additional stocks.

Convertible Preferred Stock

A type of preferred stock that holders can convert into a specified number of shares of common stock.