If the Price of a Candy Bar Is $1 and the Price

question 369

Multiple Choice

If the price of a candy bar is $1 and the price of a fast food meal is $5, then the

• A) relative price of a candy bar is 5 fast food meals per candy bar.
• B) money price of a candy bar is 1/5 of a fast food meal per candy bar.
• C) relative price of a fast food meal is 5 candy bars per fast food meal.
• D) money price of a fast food meal is 1/5 of a candy bar per fast food meal.

---

Definitions:

Domestic Deflation

A decline in the general price level of goods and services within a domestic economy over a period of time.

Exports and Imports

Describes goods and services sold to other countries (exports) and goods and services purchased from other countries (imports).

Flexible Exchange Market

A foreign exchange system where the value of currencies are determined by market forces without direct government intervention.

Equilibrium Exchange Rate

The exchange rate at which the demand for a currency equals its supply in the foreign exchange market, resulting in a stable market price.