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16-01-2023
Business

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Suppose the price level and value of the U.S. dollar in year 1 are 1 and $1, respectively. If the price level rises to 1.25 in year 2, what is the new value of the dollar? If, instead, the price level falls to 0.50, what is the value of the dollar?

If the price level rises to 1.25, the value of the dollar will decrease to $0.8. If the price level falls to 0.50, the value of the dollar will increase to $2.

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