Suppose the price level reflects the number of dollars needed to buy a basket of goods containing one cup of coffee, one donut, and one newspaper. In year one, the basket costs $9.00. In year two, the price of the same basket is $8.00. From year one to year two, there is (a. inflation, b. deflation) at an annual rate of ___ %. In year one, $72.00 will buy ____ baskets, and in year two, $72.00 will buy ____ baskets. This example illustrates that, as the price level falls, the value of money (a. rises, b. falls, c. remains the same).
Suppose the price level reflects the number of dollars needed to buy a basket of goods containing one cup of coffee, one donut, and one newspaper. In year one, the basket costs $9.00. In year two, the price of the same basket is $8.00. From year one to year two, there is (a. inflation, b. deflation) at an annual rate of ___ %. In year one, $72.00 will buy ____ baskets, and in year two, $72.00 will buy ____ baskets. This example illustrates that, as the price level falls, the value of money (a. rises, b. falls, c. remains the same).
Principles of Economics (MindTap Course List)
8th Edition
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter24: Measuring The Cost Of Living
Section: Chapter Questions
Problem 3PA
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Suppose the price level reflects the number of dollars needed to buy a basket of goods containing one cup of coffee, one donut, and one newspaper. In year one, the basket costs $9.00.
In year two, the price of the same basket is $8.00. From year one to year two, there is (a. inflation, b. deflation) at an annual rate of ___ %.
In year one, $72.00 will buy ____ baskets, and in year two, $72.00 will buy ____ baskets.
This example illustrates that, as the price level falls, the value of money (a. rises, b. falls, c. remains the same).
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