reflection questions\nyour grandmother tells you a dollar doesnt go as far as it used to. she says the…

reflection questions\nyour grandmother tells you a dollar doesnt go as far as it used to. she says the “purchasing power” of a dollar is much less than it used to be. explain what she means. try to use and explain terms like inflation and deflation in your answer.\ntype your entry and click submit...

reflection questions\nyour grandmother tells you a dollar doesnt go as far as it used to. she says the “purchasing power” of a dollar is much less than it used to be. explain what she means. try to use and explain terms like inflation and deflation in your answer.\ntype your entry and click submit...

Answer

Brief Explanations:

Purchasing power refers to the quantity of goods and services a unit of currency can buy. Inflation is the general increase in prices over time. When there is inflation, the same amount of money (like a dollar) can buy fewer goods and services, so its purchasing - power decreases. Deflation is the opposite, a general decrease in prices, which would increase the purchasing power of a dollar. Your grandmother is likely referring to inflation over time that has eroded the purchasing power of the dollar.

Answer:

Your grandmother means that due to inflation, the general rise in prices over time, a dollar can buy fewer goods and services now compared to the past, reducing its purchasing power. Deflation, a general fall in prices, would have the opposite effect and increase the purchasing power of a dollar, but in this case, inflation is likely the cause of the decreased purchasing power she's observing.