Suppose the Value of the Consumer Price Index (CPI)is 110

question 45

Multiple Choice

Suppose the value of the consumer price index (CPI) is 110 in year 1,116 in year 2,and 127 in year 3.Assume also that the price of computers increases by 3% between year 1 and year 2,and by another 3% between year 2 and year 3.The price level is increasing,the inflation rate is _______,and the relative price of computers is _________.

• A) increasing;increasing
• B) constant;increasing
• C) constant;decreasing
• D) increasing;decreasing
• E) decreasing;decreasing