Which of the following is a true statement regarding a general price index?

Question

Quizplus · Accepted Answer

A general price index is a broad-based index that is used to calculate the change in prices for all goods and services in an economy. It is constructed using statistical sampling techniques to ensure that it accurately reflects the overall price level of the economy. It can be used to adjust historical costs for inflation, making it a valuable tool for measuring changes in purchasing power over time. Option A is incorrect because statistical sampling is an integral part of constructing a price index. Option B is incorrect because a narrowly-constructed index would not provide a comprehensive picture of price changes in the economy. Option D is incorrect because price-level adjusted historical cost is precisely what a price index helps to calculate.

Which of the Following Is a True Statement Regarding a General