Question

ASAP PLEASEEE!!! If the price level were to rise from 160 to 200, in what direction and by how much would the value of a dollar change?

Answer 1

Answer:

- Downward direction

- The change in dollar value is 0.00125

Explanation:

Given

$P_1 = 160$

$P_2 = 200$

Required

Direction and value of dollar change

Value is calculated using

$V = \frac{1}{P}$

When $P_1 = 160$, the value is:

$V_1 = \frac{1}{160}$

$V_1 = 0.00625$

When $P_2 = 200$, the value is:

$V_2 = \frac{1}{200}$

$V_2 = 0.005$

So, we have:

$V_1 = 0.00625$

$V_2 = 0.005$

Notice that $V_1 > V_2$

i.e. the initial value is greater than the new value

Hence, the value of dollar moves down

The change in value is:

$\triangle V = |V_2 - V_1|$

$\triangle V = |0.005 - 0.00625|$

$\triangle V = |- 0.00125|$

Remove absolute sign

$\triangle V = 0.00125$

The change in dollar value is 0.00125