Suppose that the consumer price index fell by 4% between this year and last year,and the price of a typical automobile fell by 3%.Which of the following is TRUE?

Question

Quizplus · Accepted Answer

The real price of a car increased because the overall price level (as measured by the consumer price index) fell by 4%, but the price of a car fell by a smaller amount, 3%. This means in terms of purchasing power, cars became relatively more expensive compared to the general basket of goods.

Suppose That the Consumer Price Index Fell by 4% Between