Which of the following is true of a price level increase in an economy?
A)When the price level increases,the purchasing power of money increases.
B)When the price level increases,the purchasing power of money decreases.
C)When the price level increases,the purchasing power of money remains unchanged.
D)When the price level increases,the purchasing power of money either increases or decreases,depending upon the size of the national debt.
E)When the price level increases,the purchasing power of money either increases or decreases,depending upon the level of government expenditures.

Question

Quizplus · Accepted Answer

When the price level increases, the purchasing power of money decreases. This means that each unit of currency can buy fewer goods and services than before, leading to inflation.

Which of the Following Is True of a Price Level