The price of a basket of groceries rises from $30 to $40 but your salary remains the same. This is an example of a decline in which of the following for you, personally?
A) standard of living
B) purchasing power
C) cost of living index
D) GDP index

Question

Quizplus · Accepted Answer

Purchasing power refers to the amount of goods and services that can be purchased with a particular amount of money. In this case, the increase in grocery prices means that you can purchase fewer goods with the same amount of money, resulting in a decline in personal purchasing power. A rise in the cost of living index would also indicate a decline in purchasing power. Standard of living and GDP index are broader factors and may not necessarily be affected by this specific scenario.

The Price of a Basket of Groceries Rises from $30