At a price level of 100, John has savings equal to $20,000. If the price level increases to 130, the buying power of John's savings is approximately
A) $15,400.
B) $12,780.
C) $26,000.
D) $30,000.
E) $20,000.

Question

Quizplus · Accepted Answer

The buying power of John's savings decreases as the price level increases from 100 to 130. To find the new value of his savings in terms of buying power, divide the original savings by the new price level and multiply by the original price level: ($20,000 / 130) * 100 = $15,384.62, which is approximately $15,400.

At a Price Level of 100, John Has Savings Equal