Asked by Latasha Scott on Jul 25, 2024
Verified
When the Consumer Price Index increases from 100 to 115
A) more money is needed to buy the same amount of goods, so the value of money falls.
B) more money is needed to buy the same amount of goods, so the value of money rises.
C) less money is needed to buy the same amount of goods, so the value of money falls.
D) less money is needed to buy the same amount of goods, so the value of money rises.
Consumer Price Index
An index that measures the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care.
- Apprehend the connection among money supply, its value, and the pricing level.
Verified Answer
GB
gizeal bahatiJul 26, 2024
Final Answer :
A
Explanation :
When the Consumer Price Index (CPI) increases, it indicates that the average level of prices for goods and services has risen, meaning consumers need more money to buy the same amount of goods. This effectively reduces the purchasing power of money, indicating that the value of money falls.
Learning Objectives
- Apprehend the connection among money supply, its value, and the pricing level.