When prices are measured in terms of fixed (base-year)prices they are called ________ prices.

Question

Quizplus · Accepted Answer

Real prices are prices that have been adjusted for inflation by using a fixed (base-year) price level. This allows for more accurate comparisons of prices over time. Nominal prices, on the other hand, are just the raw prices without any adjustment for inflation. Choice C (inflated) is incorrect because it implies that prices have been adjusted upwards, which is not the case with real prices. Choice D (aggregate) is incorrect because it does not refer specifically to prices that have been adjusted for inflation.

When Prices Are Measured in Terms of Fixed (Base-Year)prices They