[s] When the consumer price index falls, the typical family has to spend fewer d

Question

[s] When the consumer price index falls, the typical family has to spend fewer dollars to maintain the same standard of living. economy' s overall price level is rising. which to choose, and this in turn increases the cost of maintaining the 16) Economists use the term inflation to describe a situation in which the 17] When a new good is introduced, consumers have more variety from same level of economic well-being. [8] The real interest rate is the interest rate corrected for inflation. 9] Like physical capital, human capital is a produced factor of production.

Explanation / Answer

5. True. Because the price level and inflation reduces, so the consumer can now spend fewer dollars to purchase the good.
6. True. Because inflation is used as the measure of price level and to know whether it is increasing or decreasing.
7. True. Because of introduction of a new good the consumers would have greater choice which reduces the amount to be spent on to maintain their standard of living.
8. True. When the nominal interest rate is subtracted with inflation which gives the real interest rate
9. True as it is also one of the factors used in production process.

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