May has been holding her retirement savings in a safe in her house. If the economy is currently experiencing a falling price level,
A) the real purchasing power of her money remains constant.
B) the real value of her savings is decreasing as long as the price level is falling.
C) the real value of her savings is increasing as long as the price level is falling.
D) the nominal value of her savings remains constant.

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.

May Has Been Holding Her Retirement Savings in a Safe