Suppose the price level reflects the number of dollars needed to buy a basket of goods containing one cup of coffee, one donut, and one newspaper. in year one, the basket costs $9.00.in year two, the price of the same basket is $8.00. from year one to year two, there is at an annual rate of .in year one, $72.00 will buy baskets, and in year two, $72.00 will buy baskets. this example illustrates that, as the price level falls, the value of money

Increases

Explanation:

Value of money can be defined as number of units you get with that money.

Provided a unit here means this combination of newspaper, cup of coffee, and a donut.

Earlier in year 1 it use to cost $9

Then for $72 we can have = 8 Units

In year 2 the basket costs $8 as there was a decline in price level

Therefore for $72 we can buy = = 9 units

Therefore with decrease in price level from $9 to $8 that is by 1 dollar, value of money has increased from 8 units to 9 units of basket.

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.

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