Consider a Nation in Which the Price Index Last Year

question 40

Multiple Choice

Consider a nation in which the price index last year was 130 and this year it is 150.Which statement is correct?

• A) Inflation was 20% this year.
• B) Deflation was 20% this year.
• C) Housing prices must have risen.
• D) Inflation was 38% this year.
• E) Deflation was 38% this year.

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Definitions:

Fair Value

A measurement of the price at which an asset or liability could be exchanged in an orderly transaction between market participants at the measurement date.

Held-To-Maturity Securities

Held-to-maturity securities are financial assets purchased with the intent and ability to hold them until a specified maturity date, typically including certain kinds of bonds.

Fair Market Value

An estimate of the market value of a property, assuming that both buyer and seller are knowledgeable, willing, and under no pressure to transact.

Interest Revenue

Income earned from lending money or depositing funds into interest-bearing accounts.