Author Question: When the nominal price of a good increases over time, must its real price also increase? What ... (Read 70 times)

waynest · **on:** Jun 29, 2018

When the nominal price of a good increases over time, must its real price also increase?

What will be an ideal response?

Question 2

In its macroeconomic equilibrium, the economy can be producing at

i. below full employment.
ii. full employment.
iii. above full employment.
A) i only B) ii only C) iii only D) i or ii E) i, ii, or iii

tdewitt · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

No, even though the nominal price of a good increases, its real price might decrease. For instance, the nominal price of motorcycles has increased between 1970 and 2010, but their real price has decreased because the CPI increased even more rapidly.

Answer to Question 2

E