Assume the economy produces five goods.If the prices of three of the goods increase,then the price level must increase.

Name: Assume the economy produces five goods.If the prices of three of the goods increase,then the price level must increase.
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Question

Quizplus · Accepted Answer

The price level is determined by the average of all prices in the economy. If the prices of two goods decrease or remain constant while the prices of three goods increase, the overall price level may not necessarily increase.

Assume the Economy Produces Five Goods