Why is there an inverse relationship between the purchasing power of the dollar and the price level?
Multiple choice question.
Because when the price level rises, less dollars are needed to buy a particular amount of goods, services, or resources
Because when the price level rises, the same amount of dollars are needed to buy a particular amount of goods, services, or resources
Because when the price level rises, the value of the dollar also rises
Because when the price level rises, more dollars are needed to buy a particular amount of goods, services, or resources
1 answer
The correct answer is:
Because when the price level rises, more dollars are needed to buy a particular amount of goods, services, or resources.
This statement explains the inverse relationship between the purchasing power of the dollar and the price level. When prices rise, the value or purchasing power of each dollar decreases, meaning you need more dollars to purchase the same quantity of goods and services.
