Business, 18.11.2019 20:31 shadowsnake

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 $10.00.

in year two, the price of the same basket is $9.00. from year one to year two, there is 1) (a) inflation (b) deflation at an annual rate of 2) (a)-10.00% (b) -1.11% (c) 1.00% (d) 11.11% .

in year one, $80.00 will buy 3) (a) .11 (b) .13 (c) 4.44 (d) 8 (e) 8.89 baskets, and in year two, $80.00 will buy 4) (a) .11 (b) .13 (c) 4.44 (d) 8 (e) 8.89 baskets.

this example illustrates that, as the price level falls, the value of money 5) (a) rises (b) falls (c) remains the same .

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