Question

Your grandmother tells you a dollar doesn’t 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.

Answer 1

Well, you could say that the purchasing power of a dollar is much less because more money is made and causes the worth of the dollar bill to decrease, making things more expensive. This is called inflation. However, when less money is made, the worth of a dollar bill increases, and things become less expensive. this is called deflation

Answer 2

In the given scenario,  we might have one to say that purchasing power of the dollar is much lower since more money is being created, leading the value of the dollar note to fall, causing products to be more expensive.

• Inflation is the term used to describe this. When less money is made, the value of a dollar rises and prices fall. Disinflation is the term for all of this.
• Buying power is lower than was previously. Back then, a dollar buys $50. There was a severe lack of money.

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