If the price level increases
A) the buying power of your bank saving account falls.
B) the buying power of your bank saving accounts rises.
C) there is no effect on buying power.
D) the economy tends to grow faster.

Question

Quizplus · Accepted Answer

An increase in the price level implies a decrease in the value of money. Therefore, the buying power of bank saving accounts falls. This is because the same amount of money can now buy fewer goods and services.

If the Price Level Increases