Answer: -14.3%
Explanation:
The Value of money can be calculated by the formula;
Value of money = Amount of money / Price Level
Orginally the value of money was 1, the amount was 1.2 and so was the price level.
Price level has changed so the new value is;
= 1.2/1.4
= $0.857
The change therefore is;
=( 0.857 - 1) / 1
= -14.3%
If the price level changes from 1.2 to 1.4, the value of the country's currency change by -14.3 percentage.
We are provided with the information that The Value of Currency is 1, Price level is 1.2, and the change in price level by 0.2, We need to find the value of currency after this change.
The Formula for calculating value of Currency = Amount of money / Price Level
Orginally the value of money was 1, the amount was 1.2
The new value after the change is = 1.2/1.4
= $0.857
The change therefore is of =( 0.857 - 1) / 1
= -14.3%
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