Question

An economy produces wind turbines, pizza, automobiles, and haircuts. Consumers purchase pizza and haircuts, as well as T-shirts made in another country. Firms purchase wind turbines, as well as x-ray machines made in another country. The government purchases automobiles. An increase in the price of x-ray machines will increase the _____ price index. An increase in the price of T-shirts will increase the _____ price index.

Answer 1

An increase in the price of x-ray machines will increase the _Inflation____ price index. An increase in the price of T-shirts will increase the __Inflation___ price index.

Step-by-step explanation:

Given -

The price of the X ray machine and the T-shirt is rising and people's income is stable. In this scenario, the purchasing ability of a person declines and he/she will not be able to buy these two commodities thereby increasing the inflation price index.

An increase in the price of x-ray machines will increase the _Inflation____ price index. An increase in the price of T-shirts will increase the __Inflation___ price index.