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Two charts show how much the consumer basket costs in Macedonia, expressed in denars, and how much the same basket would cost if we paid with gold (in grams of gold). A consumer basket (CB) is a collection of typical goods and services purchased by an average household, used to measure the cost of living and the decline in the value of fiat money (inflation). When the price of the basket changes, it tells us how much prices in the country are rising or falling.

Why do we compare it with gold?

Gold (the money of our ancestors) is considered a stable store of value that doesn’t change much over time due to the small increase in the total amount of gold in the world. When we compare the basket in denars with its value in grams of gold, we can see whether the denar has lost value – in other words, whether we can buy more or less with the same amount of gold today than before. The first chart shows the period from 2004 to 2010, based on the old calculation method. The second chart covers the period from 2011 to the present, using the new method.

This is one way to better understand how changes in the money supply affect changes in prices that impact our everyday lives.

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THE CHANGE IN THE MONEY SUPPLY AFFECTS ITS VALUE.