Jason has been holding his retirement savings in a safe in his house. Currently, the economy is experiencing a falling price level. He can conclude that:
A)the real purchasing power of his money is constant.
B)the real value of his savings would increase as long as the price level falls.
C)the real value of his savings would decrease as long as the price level is falls.
D)he would have been worse off if he had deposited his savings at a bank.
E)he would have been better off if he had used a major percentage of his savings for consumption earlier.

Question

Quizplus · Accepted Answer

When the price level falls, the real value or purchasing power of money increases because each unit of currency can buy more goods and services than before. Therefore, if Jason has been holding his retirement savings in cash and the economy is experiencing a falling price level, the real value of his savings would increase.

Jason Has Been Holding His Retirement Savings in a Safe