When the price level increases, the purchasing power of money:
A. decreases.
B. stays the same since the purchasing power of money is not impacted by price levels.
C. increases by a similar amount.
D. first increases and then decreases as people get used to higher prices.
Answer: A
You might also like to view...
Which point or points on the above figure illustrate a short-run equilibrium?
A) Point A B) Point C C) Point B D) Points A and C
If a box of strawberries has a marginal utility to you of 30 and its price is $5, while a box of blueberries has a marginal utility to you of 10 and its price is $2, then if you were thinking of the next purchase
a. strawberries are a better buy than blueberries b. blueberries are a better buy than strawberries c. either blueberries or strawberries will do, you value them equally d. neither will do because one has a higher marginal utility while the other has a lower price e. you should buy both strawberries and blueberries
Which of the following observations is not true?
a. Money is divisible. b. The value of money never remains the same. c. Money has an intrinsic value. d. Money is the most liquid form of asset.
Government programs that automatically shift the government budget toward a deficit during recessions and a surplus during recoveries are called
a. discretionary fiscal policy. b. automatic stabilizers. c. progressive taxation. d. price deflators.