What is Purchasing power?
Purchasing power: How many goods a unit of money can buy.
Where Purchasing power fits
Purchasing power is part of Economy & Rates in Global Trade. Global economics links currencies, interest rates, inflation and investment. Exchange rates change what trade costs, and foreign direct investment means building abroad.
Practical tip
Hedge currency risk and watch central bank rates.
Related terms
- GDP
- Total value of goods and services a country produces in a period.
- Recession
- A period when the economy shrinks and jobs and sales fall.
- Interest rate
- The price of borrowing money, shown as a percentage.
- Inflation
- A general rise in prices that reduces what money can buy.
- Monetary policy
- Central bank actions on interest rates and money supply to steer the economy.
- Deflation
- A general fall in prices that raises money's buying power.
- Globalization
- The growing connection of economies and cultures.
- Currency devaluation
- A deliberate drop in a currency's value.
Formulas you will use with it
Test yourself
Which term means: “How many goods a unit of money can buy.”?
Deflation · Purchasing power · Recession
Answer: Purchasing power
Learn Purchasing power by playing
Quizzes, a CEO simulator, a real estate tycoon game and startup tools. Free to start, in 7 languages.
Play BizJourney free →