Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter22: Inflation
Section: Chapter Questions
Problem 18RQ: What is deflation?
Related questions
Question
Define and quantify the loss of
Expert Solution
Step 1 : Defining PP
Purchasing power (PP) is the real amount of good that we can obtain for a given amount of money. If the amount of good that we can obtain from a given amount of money decreases then we say that the PP has fallen. Among various other factors one that results to a decrease in PP is inflation.
If inflation occurs then the price of goods/services increases and therefore we can buy fewer amount of goods/services with a given amount of money as a result of inflation. Thus, with rise in inflation the PP reduces.
Step by step
Solved in 2 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics 2e
Economics
ISBN:
9781947172364
Author:
Steven A. Greenlaw; David Shapiro
Publisher:
OpenStax
Principles of Economics 2e
Economics
ISBN:
9781947172364
Author:
Steven A. Greenlaw; David Shapiro
Publisher:
OpenStax