Question

Suppose the price level and value of the U.S. dollar in year 1 are 1 and $1, respectively. Instructions: Enter your answers rounded to 2 decimal places. a. If the price level rises to 1.10 in year 2, what is the new value of the dollar

Answer 1

the new value of the dollar is $0.91

Step-by-step explanation:

a. The computation of the new value of the dollar is given below:

= Dollar ÷ increase in price

= $1 ÷ 1.10

= $0.91

Hence, the new value of the dollar is $0.91

It could be determined by applying the above formula so the new value of the dollar could be come and in correct way