If you have $5,000 in wealth and the price level decreases 20 percent,then
A) the $5,000 will buy fewer goods and services.
B) the $5,000 will buy more goods and services.
C) the real value of the $5,000 decreases.
D) the real value of the $5,000 remains constant.

Question

Quizplus · Accepted Answer

If the price level decreases by 20%, then the purchasing power of money will increase by the same percentage. So, the $5,000 will be able to buy more goods and services. This means the real value of the $5,000 increases, as it can purchase more goods and services.

If You Have $5,000 in Wealth and the Price Level