Business, 02.04.2020 02:14 davidaagurto
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 (deflation/inflation (1)) at an annual rate of ( (2)). In year one, $72.00 will buy ((3)) baskets, and in year two, $72.00 will buy ((4)) baskets. This example illustrates that, as the price level falls, the value of money (rises/falls/remains the same (5)).
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