Measuring the price level and inflation - Measuring the price level - Relative price

5 important questions on Measuring the price level and inflation - Measuring the price level - Relative price

What does a relative price help us understand?

It helps in understanding how expensive something is compared to alternatives.

What type of value do relative prices represent?

They represent ratios, not just the dollar value.

What can change without affecting overall inflation?

Relative prices can change significantly without impacting overall inflation levels.
  • Higher grades + faster learning
  • Never study anything twice
  • 100% sure, 100% understanding
Discover Study Smart

What is an example of a relative price change?

An example is petrol’s price doubling temporarily, which is not inflation.

How does one item’s price change relate to the overall economy?

A significant price change in one item does not shift the economy’s average price level.

The question on the page originate from the summary of the following study material:

  • A unique study and practice tool
  • Never study anything twice again
  • Get the grades you hope for
  • 100% sure, 100% understanding
Remember faster, study better. Scientifically proven.
Trustpilot Logo