Homework Answers
Answer - A) rises because one unit of currency buys more smart phones. This is called deflation.
Reason- if the price level falls, it means that the value of currency is increased. In other words the price level can identify the value of goods each unit of currency can purchase. Price level and currency are inversely related. So as the price level falls the value of currency increased, and more smartphone phones can be bought than before on the same amount of currency.
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