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

Question

Quizplus · Accepted Answer

When the price level falls, the number of dollars needed to buy a representative basket of goods decreases. This means that the value of money has increased, as it can purchase more goods and services than before.

When the Price Level Falls, What Happens to the Number