If you have $1,000 in wealth and the price level increases 20 percent,then
A) the $1,000 will buy fewer goods and services.
B) the $1,000 dollars will buy 20 percent more goods and services.
C) the real value of the $1,000 increases.
D) you will be able to buy fewer goods, but the real value of those goods will increase.

Question

Quizplus · Accepted Answer

When the price level increases by 20%, the purchasing power of $1,000 decreases, meaning that you will be able to buy fewer goods and services with the same amount of money. This is a decrease in real value.

If You Have $1,000 in Wealth and the Price Level