When the Value of Money Rises, What Happens to the Number

question 5

Multiple Choice

When the value of money rises, what happens to the number of dollars needed to buy a representative basket of goods?

• A) It increases, and so the price level rises.
• B) It increases, and so the price level falls.
• C) It decreases, and so the price level rises.
• D) It decreases, and so the price level falls.

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Definitions:

Percent Decrease

A measure of how much a quantity has decreased in percentage terms compared to its previous value.

Percent Increase

The process of determining the ratio of the increase in a quantity to the original amount, expressed as a percentage.

Stock Value

The price of a single share of a company's stock, representing ownership in the company and its potential profitability.

Interest Rate

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan remaining.