Suppose There Are Only Two Goods (Good a and Good

question 172

Multiple Choice

Suppose there are only two goods (Good A and Good B) and the average person buys 4 of Good A in a year and 3 of Good B. If, in the base year, the Price of Good A is $5 and the Price of Good B is $10, and in the next year the Price of Good A is $6 and the Price of Good B is $9, the inflation that occurred in the second year is

• A)is 50%.
• B)is 100%.
• C)is 10%.
• D)is 20%.

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