If the price index rises from 100 to 120, the purchasing power of money: MCQ with Answer and Explanation

Question Report Error

If the price index rises from 100 to 120, the purchasing power of money:

A. Increases by 20%

B. Remains unchanged

C. Decreases by 20%

D. Decreases by 16.67%

Answer: Option D

Solution (By JKExamLibrary)

Purchasing power = 1/price index. Old: 1/100=0.01, new: 1/120≈0.00833, decline = (0.01-0.00833)/0.01 = 0.1667 or 16.67%.

This question belongs to: Accountancy and Statistics Statistics

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Practice More Statistics Questions

Question #1 Report Error

If the median of a data set is 50, it indicates that:

A. All values are 50

B. 50% of the values are less than or equal to 50

C. 50 is the most frequent value

D. The average value is 50

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Correct Answer: Option B

Explanation:
Median is the 50th percentile, dividing the data into two halves.

This question belongs to: Accountancy and Statistics Statistics

Question #2 Report Error

The time reversal test is satisfied by:

A. Paasche index

B. Laspeyres index

C. Simple aggregative index

D. Fisher index

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Correct Answer: Option D

Explanation:
Fisher is the only one among these that satisfies time reversal test.

This question belongs to: Accountancy and Statistics Statistics

Question #3 Report Error

Which index number is most commonly used to measure inflation and changes in the purchasing power of money for standard households?

A. Wholesale Price Index

B. Consumer Price Index (Cost of Living Index)

C. Index of Industrial Production

D. Sensex

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Correct Answer: Option B

Explanation:
The CPI (or Cost of Living Index) measures the average change in prices paid by consumers for a basket of goods and services.

This question belongs to: Accountancy and Statistics Statistics

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