Economics 9708 · AS & A Level · Balance of payments

Balance of payments — practice question

Assume that an average consumer’s spending is split among bread, meat, milk and vegetables in the ratio 4 : 3 : 2 : 1. Over a year, the price of bread decreases by 10%, the price of meat rises by 20%, and the prices of both milk and vegetables rise by 10%. By how much does the average price level increase during the year?

  • A5%
  • B7.3%
  • C10%
  • D12.5%

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