When the price level rises, the number of dollars needed to buy a representative basket of goods
A)increases, so the value of money rises.
B)decreases, so the value of money rises.
C)increases, and so the value of money falls.
D)decreases, so the value of money falls.

Question

Quizplus · Accepted Answer

When the price level rises, it means that more dollars are needed to purchase the same basket of goods, indicating that each dollar has less purchasing power. Therefore, the value of money falls.

When the Price Level Rises, the Number of Dollars Needed