ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Purchasing power is a currency’s value expressed in terms of the number of goods or services that can be bought by one unit of capital. Purchasing power is significant; while everything else is equal, inflation reduces the number of goods or services you might purchase.

Detailed explanation-2: -Purchasing power is the amount of goods or services that a unit of currency can buy at a given point in time.

Detailed explanation-3: -The purchasing power of currency is the quantity of goods and services that can be bought with a monetary unit. Because of rising prices, the purchasing power of currency deteriorates over time. Outside of the country, it drops in cases of depreciation and devaluation and increases with the opposite.

Detailed explanation-4: -Consumer buying power is how you (the consumer) decide to spend money. It’s all about your behavior. If you have $500 to spend on items each month, then that’s your consumer buying power-meaning $500 is how much money you’ll put back into the economy when you buy stuff.

Detailed explanation-5: -Consumer Price Index (CPI) is the index number which is used to calculate purchasing power of money and real wage.