Recall the formula that states that $V = 1/P, where V is the value of the dollar

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Recall the formula that states that $V = 1/P, where V is the value of the dollar and P is the price level. If the price level falls from 1 to 0.75, what will happen to the value of the dollar?

a. It will rise by a third (33.3 percent).

b. It will rise by a quarter (25 percent).

c. It will fall by a quarter (−25 percent).

d. It will fall by a third (−33.3 percent).

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Macroeconomics

ISBN: 9781264112456

22nd Edition

Authors: Campbell McConnell, Stanley Brue, Sean Flynn

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