Last year the price level increased from 118 to 122.The increase in the price level leads to a decrease in
A)potential GDP.
B)the buying power of money.
C)the real interest rate.
D)the money wage rate.
E)the price of domestic goods and services relative to foreign goods and services.

Question

Quizplus · Accepted Answer

An increase in the price level reduces the buying power of money, meaning that each unit of currency can purchase fewer goods and services. This can lead to inflation and impacts consumers' ability to afford goods and services. The other options are not necessarily impacted by an increase in the price level.

Last Year the Price Level Increased from 118 to 122