The real price of a good reflects:
A)the purchasing power of consumers.
B)its nominal price adjusted for the changing value of money.
C)the absolute average price of goods and services.
D)the total amount of money in circulation in the economy.

Question

Quizplus · Accepted Answer

The real price of a good reflects its nominal price adjusted for the changing value of money, also known as inflation. This means that the real price accounts for changes in the purchasing power of consumers over time, making it a more accurate measure of a good's cost. Option A is incorrect because the purchasing power of consumers is one factor that affects the real price, but does not define it. Option C and D are also incorrect, as the real price is not determined by the average price of goods and services or the total amount of money in circulation in the economy.

The Real Price of a Good Reflects