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An increase in the relative price of a good cannot be caused byA) an increase in the nominal price of the good that is greater than the increase in the nominal price of the other good.B) a decrease in the nominal price of the other good while the price of the good itself remains constant.C) an increase in the nominal price of the other good while the price of the good itself remains constant.D) a decrease in the nominal price of the good that is less than the decrease in the nominal price of the other good.

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Answer:

C) an increase in the nominal price of the other good while the price of the good itself remains constant.

Step-by-step explanation:

Relative price is the price of a good relative to the price of another good. It is also known as real price.

Nominal price is the price of a good in money terms.

Let's assume the price of bread is $5 and the price of a frame is $7. The relative price is $5 / $7 =0.7 and the nominal prives are $5 and $7. Assume:

1. That the price of bread rises to $10 And the price of a frame rises to $8. The relative price rises from 0.7 to 1.25.

2. That the price of bread remains constant and the price of frames fall to $5. The relative price becomes 1.

3. Assume frames rise to $8 while bread remains $5. The relative price becomes 0.625.

4. Assume bread decreases To $4 And frames decrease to $3. The relative price becomes 1.3.

It is only the third scenario that doesn't increase the relative price of bread.

I hope my answer helps you.

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