What does it mean if the purchasing power in 1950 was $4.15 relative to the 1982 base year?
A)It took $4.15 in 1950 to buy what $1 bought in 1982.
B)The average price level in 1982 was five times as high as in 1950.
C)$4.15 in 1950 had the same nominal money value as $1 in 1982.
D)It took $4.15 in 1982 to buy what $1 bought in 1950.
E)Nominal prices have increased by more than 400 percent between 1950 and 1982, but the real value of money has not changed.

Question

Quizplus · Accepted Answer

The purchasing power in 1950 was $4.15 relative to the 1982 base year means that it took $4.15 in 1982 to buy what $1 bought in 1950. This is because the value of money has decreased due to inflation, so it takes more money to buy the same amount of goods and services over time. Therefore, the correct option is D.

What Does It Mean If the Purchasing Power in 1950