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 remaining constant.
B)the real value of his savings is increasing as long as the price level is falling.
C)the real value of his savings is decreasing as long as the price level is falling.
D)none of the above are true.

Question

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 remaining constant.
B)​the real value of his savings is increasing as long as the price level is falling.
C)​the real value of his savings is decreasing as long as the price level is falling.
D)​none of the above are true.

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's retirement savings are held in cash, the real value of his savings increases as the price level falls.

Jason Has Been Holding His Retirement Savings in a Safe