If all absolute prices increase by 10%,then the economy's relative prices will remain unchanged.

Question

Quizplus · Accepted Answer

If all prices increase by the same percentage, then the ratios between prices will remain constant, meaning that relative prices will remain unchanged. For example, if the price of a loaf of bread was $1 and the price of a gallon of milk was $4, their relative price ratio is 1:4. If both prices increase by 10%, the price of bread becomes $1.10 and the price of milk becomes $4.40, maintaining the same 1:4 ratio.

If All Absolute Prices Increase by 10%,then the Economy's Relative