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9. The level oi prices and the 1value of money:r Suppose the price level reects the number of dollars needed to bu}.r a basket of

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9. The level oi prices and the 1value of money:r Suppose the price level reects the number of dollars needed to bu}.r a basket of goods containing one can of soda, one bag of chips, and one comic book. In year one, the basket costs $7.00. In year two, the price of the same basket is $6.00. From year one to year two, there is V at an annual rate of V . In year one, $21.00 will buyr V baskets, and in year two, $21.00 will buy V baskets. This example illustrates that, as the price level falls, the value of money V

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