9. The level of prices and the value of money Suppose the price level reflects the number of dollars needed to buy a bas

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9 The Level Of Prices And The Value Of Money Suppose The Price Level Reflects The Number Of Dollars Needed To Buy A Bas 1 (13.96 KiB) Viewed 13 times

9. The level of prices and the value of money Suppose the price level reflects the number of dollars needed to buy a basket of goods containing one cup of tea, one biscuit, and one magazine. 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 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