ABSTRACT
At that time the change in the price level originated in the currency itself, but the nature of the problem remains the same if changes in the price level are due to changes in the real value of goods and services. Economically, profit has only one meaning—it must be the basis for the rational satisfaction of the needs of those whose incomes depend upon the results of business activities. Proper planning of expenditure depends upon knowledge of the level of the ‘spendable income’. When price levels are rising it is well understood that higher replacement costs will eventually have to be recovered from consumers, but this elementary truth is less generally accepted in so far as goods in stock are concerned. Consideration has so far been limited to the consequences of a rising price level, but it is obvious that the same principles apply to a falling price level.
