What would make the value of money drop?

Question

3. Let us say that a community agreed to use a specially designed silicon chip as an equivalent form of money. Let us imagine that the price of a box of chocolates was 10 chips six months ago but now you need 12 chips to buy the same box of chocolates.
Would you say that the value of chocolates went up, or the value of chips went down?

Answer 1

s

Answer 2

You would need to know the price of other goods in the market to answer the question. If the relative price of chocolate compared to bread, meat, movie tickets, etc has not changed, then the value of the chips went down. If only the price of chocolate increased while all other prices remained the same, then the price of chocolate went up,

Answer 3

It'sboth. When the cost of goods and services goes up, the buying power(value) goes down. If you went out and printed more chips, this would also reduce the value of money. If you want to see a good example of this, check out Germany after WWI. The had hyper -inflation. They were printing a 10 million Mark note, which would buy a loaf of bread.

Answer 4

The value of chips probably went down. The government must have set more chips into circulation, thereby making the chips easier to get and thus inflation. The value of the chip is lessened.

Answer 5

Did the supply of chips go up, or the confidence in chips value go down or the supply of Chocolate go down? Maybe a combination. Maybe your market is inefficient and you need somebody to make a market in chocolate? Maybe there is an arbitrage opportunity here!

Answer 6

Money is dropping and it has been constantly for decades, I personally get rid of money as fast as I get it, once you buy something with it you have something "real" in your possession, if you have money spend it while you can get something with it, go buy a couple of fishing poles and other essentials

Answer 7

time

Answer 8

inflation