The value of money falls as the price level a. falls, because the number of dollars needed to buy a representative basket of goods falls. b. rises, because the number of dollars needed to buy a representative basket of goods rises. c. falls, because the number of dollars needed to buy a representative basket of goods rises. d. rises, because the number of dollars needed to buy a representative basket of goods falls.

Question

Business

Meredith Horne

29 November, 15:14

The value of money falls as the price level a. falls, because the number of dollars needed to buy a representative basket of goods falls. b. rises, because the number of dollars needed to buy a representative basket of goods rises. c. falls, because the number of dollars needed to buy a representative basket of goods rises. d. rises, because the number of dollars needed to buy a representative basket of goods falls.

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Answers (1)

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Theodore Rubio · Answer 1

b. rises, because the number of dollars needed to buy a representative basket of goods rises

Explanation:

As for an instance when goods purchased in normal circumstance for $100 = 100 units, now when the price rises to $200 for the same quantity, then in $100, we can only buy $200/100 units = $2 per unit that means for $100 we can get only $100/$2 = 50 units which means value of money has fallen as earlier with same dollars we could buy 100 units now only 50 units, which states value of money has fallen.

Final Answer

b. rises, because the number of dollars needed to buy a representative basket of goods rises