Suppose an index of average prices of imported goods in Canada indicates an increase in price of 2.3% over a 12-month period.Over the same period the Consumer Price Index indicates an increase in the general price level of 2.3%.What is the change in the price of imports relative to the change in the overall price level?

Question

Quizplus · Accepted Answer

The change in the price of imports relative to the change in the overall price level is equal to 0%. This is because both the imported goods index and the Consumer Price Index increased by the same amount (2.3%), indicating that the price of imports increased at the same rate as the overall price level. Therefore, there was no change in the relative price of imports.

Suppose an Index of Average Prices of Imported Goods in Canada