Which term describes the ability to purchase goods and services?

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Multiple Choice

Which term describes the ability to purchase goods and services?

Explanation:
This question is about purchasing power—the ability to buy goods and services with money. Purchasing power depends on the relation between income and prices: if your income stays the same but prices rise, your purchasing power falls because you can buy less with the same amount of money; if incomes rise faster than prices, purchasing power increases. This concept is different from prosperity (overall wealth), economic conditions (the broader state of the economy), or a recession (a downturn in economic activity). So the term that best describes the ability to purchase goods and services is purchasing power.

This question is about purchasing power—the ability to buy goods and services with money. Purchasing power depends on the relation between income and prices: if your income stays the same but prices rise, your purchasing power falls because you can buy less with the same amount of money; if incomes rise faster than prices, purchasing power increases. This concept is different from prosperity (overall wealth), economic conditions (the broader state of the economy), or a recession (a downturn in economic activity). So the term that best describes the ability to purchase goods and services is purchasing power.

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