Suppose the value of the CPI is 1.100 in year one, 1.122 in year two, and 1.133 in year three. Assume also that the price of computers increases by 3 percent between year one and year two, and by another 3 percent between year two and year three. The price level is increasing, the inflation rate is ________, and the relative price of computers is ________.

A. decreasing; increasing
B. decreasing; decreasing
C. increasing; decreasing
D. increasing; increasing


Answer: A

Economics

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