Suppose each good costs $5 per unit and Megan holds $40.What is the real value of the money she holds?
A)$40.If the price of goods rises,to maintain the real value of her money holdings she needs to hold more dollars.
B)8 units of goods.If the price of goods rises,to maintain the real value of her money holdings she needs to hold more dollars.
C)$40.If the price of goods rises,to maintain the real value of her money holdings she needs to hold fewer dollars.
D)8 units of goods.If the price of goods rises,to maintain the real value of her money holdings she needs to hold fewer dollars.

Question

Quizplus · Accepted Answer

With $40, Megan can purchase 8 units of goods ($40/$5 per unit = 8 units). Therefore, the real value of her money holdings is 8 units of goods. If the price of goods rises, to maintain the same real value, she would need to hold more dollars because each unit of goods would cost more.

Suppose Each Good Costs $5 Per Unit and Megan Holds