Answer:
- Peter is a compulsive gamer. He decides to buy World of Warcraft, all of its expansions, Starcraft 2, a PS3, a Wii, and an Xbox 360 since prices in general have been rising at an alarming rate. <u>INFLATION </u>
- <u> </u>Melissa decides to start her own personal library and chooses to amass a private collection of books and magazines about world religions, cooking, comics, and economics. As she reads an issue of The Economist, she discovers overall price levels have changed only 0.01% in the past 2 years and decides it doesn't matter whether she starts the project now or later. <u>PRICE STABILITY</u>
- Linda postpones her wedding even though most food prices and most service prices were dropping this year, which would help keep the cost of the wedding down. <u>DEFLATION</u>
<u>Linda's</u> money earned the most value because deflation means that the currency is gaining value as time passes. It is the opposite to inflation where a currency loses value as time passes.
