If the price level decreases by 20%, the purchasing power of $1,000 will increase to $1,200.

Name: If the price level decreases by 20%, the purchasing power of $1,000 will increase to $1,200.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

If the price level decreases by 20%, the cost of goods and services will also decrease by 20%. So, with $1,000, one can buy goods and services which earlier cost $1,200 (1000/0.8). Thus, the purchasing power of $1,000 will increase to $1,200.

If the Price Level Decreases by 20%, the Purchasing Power