If the average price level in 2001 was 1.20 relative to the base year of 1996, then a dollar in 2001 bought 20 percent more goods and services than a dollar bought in 1996.

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Quizplus · Accepted Answer

If the average price level in 2001 was 1.20 relative to the base year of 1996, it means that prices were 20 percent higher in 2001 compared to 1996, so a dollar bought 20 percent less, not more, goods and services in 2001 than it did in 1996.

If the Average Price Level in 2001 Was 1