Consider an economy that only produces and consumes two goods-food and apparel. Suppose the inflation rate based

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Consider an economy that only produces and consumes two goods-food and apparel. Suppose the inflation rate based on the consumer price index is higher during the year than that based on the GDP deflator. Assuming underlying tastes and preferences in the economy stay the same, what can you say about food and apparel price movements during the year?

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Money Banking and Financial Markets

ISBN: 978-0078021749

4th edition

Authors: Stephen Cecchetti, Kermit Schoenholtz

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