--%>
Assignment Help - homework help

Question on price level

Assume the price level and value of the dollar in year 1 are 1.0 and $1.00, respectively. If the price level increases to 1.25 in year 2, determine the new value of the dollar? If somewhat the price level had drop to .50, estimate the value of the dollar? What generalization can you draw through your answer?

E

Expert

Verified

In the primary case, the value of the dollar (in year 2, relative to year 1) is $.80 (= 1/1.25); into the second case the value is $2 (= 1/.50). Generalization: the price level & the value of the dollar are inversely associated.

   Related Questions in Finance Basics

  • Q : Explain financial markets Explain

    Explain financial markets? Why do they exist?In financial markets, financial securities are bought and sold. They exist chiefly to bring deficit economic units (those needing money) and surplus economic units (those have extra money) together.

    		•
  • Q : Mascot Simulation Simulation with

    Simulation with Crystal Ball Provided Workbook: Mascot Simulation Relevant Readings:"Discounted Cash Flow Modeling" folder + Text

    		•
  • Q : Explain the basic goal of a business

    Normal 0 false false

    		•
  • Q : Describe Schedule 7A Schedule 7A : The

    Schedule 7A: The summary version of the State Controller’s Office detailed Schedule 8 position register for each department. The information replicated in this schedule is the base for the “Salaries and Wages Supplement” exhibited on

    		•
  • Q : What is Abolishment of Fund Abolishment

    Abolishment of Fund: It is a closure of fund pursuant to the operation of law. The funds might also be administratively eliminated by the Department of Finance with the concurrence of the State Controller’s Office. Whenever a sp

    		•
  • Q : Define Fiscal Impact Analysis Fiscal

    Fiscal Impact Analysis: Usually refers to a section of an analysis (example, bill analysis) which recognizes the costs and revenue impact of a proposal and, to the level possible, a particular numeric estimate for appropriate fiscal years.

    		•
  • Q : Define Legislature Legislature,

    Legislature, California: Two-house bodies of elected representatives vested with the accountability and power to make laws affecting the state (that is, except as limited by the veto power of the Governor).

    		•
  • Q : Describe difference between business

    Describe difference between business risk and financial risk?Business risk refers to the uncertainty company hold regarding to its operating income (also termed as earnings before interest & taxes or EBIT). Business risk is brought onto sale

    		•
  • Q : Employ the aggregate demand-aggregate

    Normal 0 false false

    		•
  • Q : Explain Statewide Cost Allocation Plan

    Statewide Cost Allocation Plan (SWCAP): It is the amount of state administrative, General Fund costs (example, amounts expended by the central service departments like the State Personnel Board, State Treasurer’s Office, State C

    		•