Which of the following formulas gives you the growth in purchasing power?
A)growth of money + growth of prices
B)(1 + real rate)/ (1 + nominal rate)
C)(1 + inflation rate)/ (1 + nominal rate)
D)growth of money / growth of prices
E)growth of money × growth of prices

Question

Quizplus · Accepted Answer

The growth in purchasing power is calculated by dividing the growth of money by the growth of prices. This reflects how much more (or less) you can buy with your money over time as prices change.

Which of the Following Formulas Gives You the Growth in Purchasing