If you are have $1,000 of money in the bank and the price level rises 5 percent, your
A) money is worth less in terms of what it can purchase.
B) money is worth the same in terms of what it can purchase.
C) money is worth more in terms of what it can purchase.
D) purchasing power has risen.

Question

Quizplus · Accepted Answer

Inflation causes the price level to rise, which means that each dollar buys fewer goods and services than before. Therefore, the value of the $1,000 in the bank has decreased, and its purchasing power has fallen.

If You Are Have $1,000 of Money in the Bank