Question

Assume the value of a country's currency is 1 when the price level is \( 1.8 \). Instructions: Enter your answers rounded to 2 decimal places. If you are entering any negative numbers be sure to inclu

Answer 1

Countries may decide to change from a common currency back to their own currency for economic or political reasons, such as gaining control over monetary policy or asserting greater sovereignty.

Step-by-step explanation:

When a country decides to change from a common currency, like the euro, back to its own currency, it is usually due to economic or political reasons. Economic factors may include a desire to have more control over monetary policy, such as interest rates and inflation. Political factors may include a desire for greater sovereignty or to distance themselves from the economic policies of other countries in the currency union.

Answer 2

If the price level changes to 175, the value of the country's currency will decrease by 99.43%.

To solve for the percentage change, we will use the formula Percentage Change = ((New Value - Old Value) / Old Value) * 100

New Value = Old Value / New Price Level

New Value = 1 / 175

Percentage Change = ((1/175) - 1) / 1) * 100

= ((1/175) - 1) * 100

= ((1 - 175) / 175) * 100

= (-174 / 175) * 100

= -0.99428571428 * 100

= -99.43%

Therefore, the value of the country's currency will decrease by 99.43% when the price level changes from 0.6 to 175.

Full question:

Assume the value of a country's currency is 1 when the price level is 0.6. Instructions: Enter your answers rounded to 2 decimal places. If the price level changes to 175, by how much in percentage terms win the value of the country's currency change?