n government account
only) of lighter weight.[2] Let us observe the effect on prices that
was brought about by the discoveries of 1848-49, and, first, we
must consider briefly the method of measuring and expressing general
changes in prices.

Sec. 3. #Concept of the general price level.# The price of any good
is some other good or group of goods given for it in trade.[3] The
standard unit of money coming to be the most convenient expression for
price (whether or not money be actually passed from hand to hand in
that particular trade), prices usually are monetary prices, and
more specifically are prices in gold, or in silver, or in whatever
constitutes the standard money unit. But the price of each good is
a definite, separate fact, which expresses the ratio at which that
commodity is sold. The price of any particular kind of goods may
fluctuate in either direction as compared with the prices of other
goods at the same time. For example, iron and many other goods
may rise while wheat and many other goods fall in price. There is,
therefore, no such thing as an actual _general_ change in the prices
of goods in terms of money, but it may be seen that the prices of
large classes of goods, often of nearly all goods, change upward or
downward at the same time and in the same general direction. We
thus have need to distinguish between changes in the valuations of
particular kinds of goods in terms of each other and general changes
in the valuation of a number of different goods in terms of the
monetary unit.

To get some idea of whether such a general trend occurs, the algebraic
sum of all the changes in the particular prices of a selected group
of goods may be taken, and for convenience this may be reduced to an
average price (by dividing the sum by the number of articles). Such
an average is called a general price and, when comparing it with
the general price of another time, we speak of changes up or down
in _general prices,_ or in the _general scale of prices,_ or in the
_price level._

When gold is the standard unit, its value is the converse of general
prices; as prices go up the value of gold goes down, and gold is said
to _depreciate_. As prices go down, the value of gold goes up and gold
is said to _appreciate_. Rising prices mean falling value of gold (and
at the same time falling purchasing power), and _vice versa._

[Illustration: FIG. 2. INDEX NUMBERS OF PRICES. The four series of
prices here shown begin at d