The level of prices and the value of money

Suppose the price level reflects the number of dollars needed to buy a basket of goods containing one can of seltzer, one bag of pretzels, and one shuttle ride. In year one, the basket costs $8.00.

In year two, the price of the same basket is $9.00. From year one to year two, there is at an annual rate of

In year one, $72.00 will buy baskets, and in year two, $72.00 will buy baskets.

This example illustrates that, as the price level rises, the value of money .