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Unformatted text preview: decrease , the value of money rises. In mathematical terms the value of money and the general level of prices are reciprocals of each other. 2.5 Is inflation clearly due to too much money? Not necessarily, inflation can only occur when there is an increase in the money supply, however; but it is not a sufficient condition. Economic growth and employment effect inflation. 2.6 Prices have roughly quadrupled in the last 30 years. If they do the same over the next 30, how much will it cost annually to go to your college 30 years from now? The cost of Monmouth University in 30 years will probably cost 50-60 k. 2.8 If a country were to adopt U.S. dollars as its own currency, how would the U.S. money supply be affected? Just because another was to adopt the U.S. currency, it would increase the money supply yet it would lower the value of currency....
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- Spring '11