What would be the impact on the real price of automobiles if the nominal price increases by 60 percent over a ten year period?
A)The real price will increase by 60 percent.
B)The real price will increase,but by less than 60 percent.
C)The real price will decrease.
D)The real price cannot be determined without more information.

Question

Quizplus · Accepted Answer

The real price of automobiles takes into account the effect of inflation on purchasing power. Without knowing the rate of inflation over the ten-year period, it's impossible to determine how the real price of automobiles changes relative to the nominal price increase.

What Would Be the Impact on the Real Price of Automobiles