When the price level goes up, the purchasing power of the dollar
A) also increases.
B) falls.
C) remains constant.
D) varies directly with the interest rate.

Question

Quizplus · Accepted Answer

When the price level goes up, the purchasing power of the dollar falls. This is because as the price level increases, goods and services become more expensive, and therefore the dollar can buy fewer goods and services.

When the Price Level Goes Up, the Purchasing Power of the Dollar