If the current-period prices of every commodity rise by the same proportion while quantities remain unchanged, a suitable price index will generally:
Correct answer: B. Show the same proportional rise
- A. Remain equal to 100
- B. Show the same proportional rise
- C. Show a fall in total value
- D. Measure only the quantity change
Explanation
When every price changes by the same proportion and quantities do not change, the price index should reflect that common proportional change. It should not remain at 100 unless prices are unchanged from the base period.
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