When Inflation Causes the Absolute Prices of All Commodities to Rise,what

question 13

Multiple Choice

When inflation causes the absolute prices of all commodities to rise,what happens to the relative prices of those commodities?

• A) The relative prices also rise.
• B) When absolute prices rise,the corresponding relative prices fall.
• C) The relative prices are unaffected by changes in absolute prices.
• D) No prediction can be made about changes in relative prices.

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Definitions:

Uniform Distribution

A type of probability distribution where all outcomes are equally likely; in a continuous uniform distribution, any value within a specified range is equally likely to occur.

Standard Normal Variable

A random variable that has a normal distribution with a mean of zero and a standard deviation of one.

Random Variable

A variable whose possible values are numerical outcomes of a random phenomenon.

Standard Normal Variable

A normal random variable with a mean of zero and a standard deviation of one; used as a basis for comparison with other normal distributions.