The Price of Milk Increases Dramatically,causing a 0

question 85

Multiple Choice

The price of milk increases dramatically,causing a 0.5 percent increase in the CPI.The price increase will most likely cause the GDP deflator to increase by

• A)more than 0.5 percent.
• B)less than 0.5 percent.
• C)0.5 percent.
• D)None of the above is correct;this particular price increase will not affect the GDP deflator.

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Definitions:

Current Liabilities

Short-term financial obligations that are due within one year or within the normal operating cycle of a business.

Inventory

the total amount of goods or materials held in stock by a company, available for sale or use in production.

Noncash Expense

Expenses recorded on the income statement not requiring actual cash outflow, such as depreciation and amortization.

Depreciation

The accounting practice of allocating the cost of a tangible or physical asset over its useful life, reflecting the decrease in value of the asset over time.