Suppose the value of the consumer price index (CPI) is 110 in year 1,116 in year 2,and 118 in year 3.Assume also that the price of computers increases by 10% between year 1 and year 2,and by another 10% between year 2 and year 3.The price level is increasing,the inflation rate is _______,and the relative price of computers is _________.
A) increasing;increasing
B) constant;increasing
C) constant;decreasing
D) decreasing;increasing
E) decreasing;decreasing
Correct Answer:
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