1. the level of prices and the value of money suppose the price level reflects the number of dollars needed to buy a basket of goods containing one cup of tea, one biscuit, and one magazine. in year one, the basket costs $8.00. in year two, the price of the same basket is $7.00. from year one to year two, there is at an annual rate of . in year one, $40.00 will buy baskets, and in year two, $40.00 will buy baskets. this example illustrates that, as the price level falls, the value of money .