The purchasing power of one dollar is equal to _____.
A)real GDP divided by nominal GDP
B)nominal GDP divided by real GDP
C)1 minus the average price level
D)the reciprocal of the average price level
E)the implicit GDP deflator divided by the CPI

Question

Quizplus · Accepted Answer

The purchasing power of one dollar is the reciprocal of the average price level, which is measured by the price level index, such as the CPI or GDP deflator. Therefore, the correct answer is D: the reciprocal of the average price level.

The Purchasing Power of One Dollar Is Equal to _____