If the price of gasoline increased 100% during a period of time when inflation was 100%, then the relative real price of gasoline would:
A) increase.
B) decrease.
C) remain constant.
D) increase or decrease, depending on whether income had changed or not.

Question

Quizplus · Accepted Answer

The relative real price of gasoline would remain constant because the increase in gasoline price is exactly matched by the inflation rate, meaning the purchasing power required to buy gasoline remains the same.

If the Price of Gasoline Increased 100% During a Period