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

- Downward direction

- The change in dollar value is 0.00125

Step-by-step explanation:

Given

`P_1 = 160`

`P_2 = 200`

Required

Direction and value of dollar change

Value is calculated using

`V = (1)/(P)`

When
`P_1 = 160`, the value is:

`V_1 = (1)/(160)`

`V_1 = 0.00625`

When
`P_2 = 200`, the value is:

`V_2 = (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