If the price level doubled and someone wanted to maintain the same level of purchasing power, the nominal quantity of money demanded: A) must decrease. B) also must double. C) must increase by 50%. D) must stay the same.

If the price level doubled and someone wanted to maintain the same level of purchasing power, the nominal quantity of money demanded: A) must decrease. B) also must double. C) must increase by 50%. D) must stay the same.

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter17: Inflation

Section: Chapter Questions

Problem 16SQ

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Question

If the price level doubled and someone wanted to maintain the same level of purchasing power, the nominal quantity of money demanded:
	A)	must decrease.
	B)	also must double.
	C)	must increase by 50%.
	D)	must stay the same.

Definition Definition Value of one unit of currency in terms of goods and services. Purchasing power refers to the ability of money to purchase goods and services at a particular point of time. As price levels in the economy increase, the purchasing power of one unit of currency decreases and vice versa.

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