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An Economic Theory Claims That a Rise in Petrol Prices

Question 49

Multiple Choice

An economic theory claims that a rise in petrol prices will cause petrol purchases to fall, ceteris paribus. The phrase 'ceteris paribus' means that:


A) other relevant factors like consumers' incomes and preferences must be held constant.
B) the petrol prices must first be adjusted for inflation.
C) the theory is widely accepted but cannot be accurately tested.
D) consumers have no clues.

Correct Answer:

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