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% between year one and year two, and by another 3% between year two and year three. The price level is increasing, the inflation rate is ________, and the relative price of computers is ________.

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


Answer: B

Economics

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Whenever a consumer purchases good X but not good Y, then:

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If Samsung sells TVs at a higher price in the United States than in Korea, and if there is no cost difference in producing or transporting the TV sets, Samsung would be practicing

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Jon is consuming X and Y so that he is spending his entire income and MUx/Px = 4 and MUy/Py = 4. To maximize utility, he should consume

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Economics