You are likely to think that the relative price of your good has risen and you should increase your output if you expected
A)the inflation rate to be 10% and the price of your good rose 7%.
B)the inflation rate to be 10% and the price of your good rose 10%.
C)the inflation rate to be 10% and the price of your good rose 13%.
D)the inflation rate to be 0% and the price of your good fell 10%.

Question

Quizplus · Accepted Answer

If the inflation rate is 10% and the price of your good rose by 13%, it means your good's price increased more than the general price level, suggesting a relative price increase, which could justify increasing output.

You Are Likely to Think That the Relative Price of Your