CPA Business Environment and Concepts (BEC) : Consumer Price Index
Study concepts, example questions & explanations for CPA Business Environment and Concepts (BEC)
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Example Questions
Example Question #1 : Consumer Price Index
All of the following are components of the formula used to calculate gross domestic product except:
Foreign net export spending
Household income
Gross investment
Government spending
Household income
GDP calculated through the expenditure approach includes all of the following except household income.
Example Question #2 : Consumer Price Index
What does the consumer price index measure?
Cost of capital
Average household income
Prime rate of interest
Rate of inflation
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 : Economic Concepts & Analysis
Which of the following is correct regarding the CPI for measuring the estimated decrease in a company's buying power?
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 what consumers will pay for items
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 : Consumer Price Index
The CPI rises from 131 in year 1 to 136.5 in year 2. What is the annual inflation rate?
13.80%
3%
4.20%
1.38%
4.20%
(136.5-131)/131 * 100 = 4.2%
Example Question #5 : Consumer Price Index
If the nominal interest rate is 10% and the rate of inflation is 5%, the real interest rate is:
5%
50%
15%
2%
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.
Plenty of, plenty of
Plenty of, no
No, plenty of
No, no
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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