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 need 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 need 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

The real value of money is measured in terms of goods it can buy. With $40 and each good costing $5, Megan can buy 8 units of goods.

Suppose Each Good Costs $5 Per Unit and Megan Holds