CPA Business Environment and Concepts (BEC) : Consumer Price Index
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Example Questions
Example Question #4 : Economic Concepts & Analysis
All of the following are components of the formula used to calculate gross domestic product except:
Government spending
Household income
Foreign net export spending
Gross investment
Household income
GDP calculated through the expenditure approach includes all of the following except household income.
Example Question #1 : Consumer Price Index
What does the consumer price index measure?
Rate of inflation
Prime rate of interest
Average household income
Cost of capital
Rate of inflation
The CPI is a measure of the inflation rate (the percentage change of the consumer price index from one period to the next.)
Example Question #1 : Consumer Price Index
Which of the following is correct regarding the CPI for measuring the estimated decrease in a company's buying power?
The CPI measures what consumers will pay for items
The products a company buys should differ from what a consumer buys
The CPI is skewed by foreign currency transactions
The CPI is measures once every 10 years
The products a company buys should differ from what a consumer buys
The CPI measures the costs of a market basket of specific goods commonly purchased by consumers.
Example Question #4 : Economic Concepts & Analysis
The CPI rises from 131 in year 1 to 136.5 in year 2. What is the annual inflation rate?
4.20%
3%
13.80%
1.38%
4.20%
(136.5-131)/131 * 100 = 4.2%
Example Question #1 : Consumer Price Index
If the nominal interest rate is 10% and the rate of inflation is 5%, the real interest rate is:
15%
2%
50%
5%
5%
The real interest rate is equal to the nominal interest rate minus inflation.
Example Question #2 : Consumer Price Index
Under perfect or pure competition, ____ suppliers and customers act independently and there are ____ barriers to entry.
No, plenty of
Plenty of, no
No, no
Plenty of, plenty of
Plenty of, no
Under perfect or pure competition, plenty of suppliers and customers act independently and there are no barriers to entry.
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