If the Price of IPods Rises 10 Percent During a Year

question 68

Multiple Choice

If the price of iPods rises 10 percent during a year when the level of average prices rises 3 percent,the relative price of iPods compared with other goods

• A)Remains constant.
• B)Increases.
• C)Decreases.
• D)More information is required to answer this question.

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Definitions:

British Pounds

The currency of the United Kingdom, also known as sterling.

Euros

The official currency of the eurozone, which consists of 19 of the 27 European Union countries.

Risk-Free Rate

The expected return from an investment that carries no risk of financial loss, usually symbolized by government bonds.

Inflation Rate

How quickly the broad level of prices for goods and services climbs, degrading the spending capability.