What Happens to the Purchasing Power When Prices Rise

question 51

Multiple Choice

What happens to the purchasing power when prices rise?  

• A) The purchasing power of money increases. 
• B) The purchasing power of money decreases. 
• C) The purchasing power of money remains unchanged. 
• D) The purchasing power of money either increases or decreases, depending upon the size of the national debt.

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Definitions:

Price Expectation

Anticipations about future prices that can influence the current decisions of consumers and producers.

Surplus

A market condition where the quantity supplied exceeds the quantity demanded at a given price, often leading to downward pressure on prices.

Shortage

A market condition where the demand for a product exceeds its supply at a particular price.

Supply Of Ethanol

The total amount of ethanol available for purchase or consumption in the market.