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18 December, 12:36

If all prices, including the price of beef, increase by 3%, then the relative price of beef has and there inflation. a. remained constant, is no b. remained constant; is c. increased; is d. increased; is no

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  1. 18 December, 12:58
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    If all prices, including the price of beef, increase by 3%, then the relative price of beef has remained constant and there is inflation.

    Option B

    Explanation:

    Relative price of beef = price of beef / price of some other good.

    As both beef and other commodities rise by the same amount, the relative price remains steady.

    Because all prices have risen by 3%, inflation is there.

    The relative price is the sum of another commodity that can be substituted for a given quantity. Assume we've got two A and B consumer.

    There was a misunderstanding. Absolute goods prices may sometimes adjust, but relative prices may remain stable.
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