Vince is saving to buy his first car. The Mini Cooper he wants is $28,000 right now, but it will take at least a year for him to accumulate the down payment. He also knows that although money is a store of value, he will probably need more than $28,000 to buy the car next year because of

Question

Quizplus · Accepted Answer

Inflation refers to the general increase in prices of goods and services in an economy over time. With inflation, the purchasing power of money decreases, meaning that the same amount of money can buy fewer goods and services than before. Thus, Vince will need more than $28,000 to buy the Mini Cooper next year, as the price of the car will likely have increased due to inflation.

Vince Is Saving to Buy His First Car