If there are only two goods in the economy, one whose price rises by 3% and one by 5%, it is possible that inflation is:

Name: If there are only two goods in the economy, one whose price rises by 3% and one by 5%, it is possible that inflation is:
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Quizplus · Accepted Answer

Inflation is the weighted average of price increases. If one good's price rises by 3% and the other's by 5%, the overall inflation rate could be 4% if the weights (importance or share in consumption) of the goods are such that the average increase is 4%.

If There Are Only Two Goods in the Economy, One