LearningCausesv1

Inflation reduces the purchasing power of unchanged money

A general rise in prices means each currency unit buys fewer goods and services.

Output

A lower quantity of goods and services affordable with that income

Input

Income held constant while the consumer price level rises

Input

Income held constant while the consumer price level rises

A lower quantity of goods and services affordable with that income

Relationship

The same nominal amount must cover higher prices across the basket of purchases.

www.bls.gov: Inflation reduces the purchasing power of unchanged moneywww.bls.gov