All else equal, what happens as the price level increases?
A) The money supply falls.
B) Interest rates rise.
C) Dollars become more valuable.
D) Dollars become less valuable.

Question

Quizplus · Accepted Answer

As the price level increases, the purchasing power of money decreases, making each dollar worth less. This leads to inflation and a decrease in the value of the currency.

All Else Equal, What Happens as the Price Level Increases