When the price level increases, the purchasing power of money:
A) increases by a similar amount.
B) stays the same since the purchasing power of money is not impacted by price levels.
C) decreases.
D) first increases and then decreases as people get used to higher prices.

Question

Quizplus · Accepted Answer

When the price level increases, the purchasing power of money decreases. This is because the same amount of money can buy fewer goods and services due to the higher prices.

When the Price Level Increases, the Purchasing Power of Money