The value of money is measured in terms of price index as follows ____________
A. Prince index \(=\frac{\text { price in the current year }}{\text { Price in the previous year }} \times 100 \%\) B. Price index \(=\frac{\text { price in the previous year }}{\text { price in the current year }} \times 100 \%\) C. Princeindex \(=\frac{\text { Price in the current year }}{\left(\begin{array}{c}\text { velocity of circulation } \\ \text { of money }\end{array}\right)} \times 100 \%\) D. Princeindex \(=\frac{\text { prince in the base year }}{\text { Prince in the current year }} \times 100 \%\)
Correct Answer: A
Explanation
Price index \(=\frac{P_{i}}{P_{o}} \times \frac{100}{1}\) where \(P_{1}=\) price in current time, \(P_{w}=\) price in the base (previous year)
