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. year one, the basket costs $8.00. In year two, the price of the same basket is $7.00. From year one to year two, there is In year one, $40.00 will buy baskets, and in year two, $40.00 will buy This example illustrates that, as the price level falls, the value of money at an annual rate of baskets.
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. year one, the basket costs $8.00. In year two, the price of the same basket is $7.00. From year one to year two, there is In year one, $40.00 will buy baskets, and in year two, $40.00 will buy This example illustrates that, as the price level falls, the value of money at an annual rate of baskets.
Chapter18: Introduction To Macroeconomics: Unemployment, Inflation, And Economic Fluctuations
Section: Chapter Questions
Problem 18P
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