© 2016 Shmoop University, Inc. All rights reserved.

Finance Glossary

Just call us Bond. Amortized bond.

Over 700 finance terms, Shmooped to perfection.

Purchasing Power

Definition:

In the Golden Age of Times Past, a nickel bought you a candy bar. You had the power to purchase twenty candy bars with one dollar. Now a Big Hunk costs you a big chunk of change: say, $1. So the purchasing power of a dollar declined from then to now.

Purchasing power is a measure of how much one unit of currency buys in a certain place or time compared to what it buys elsewhere or, uh, elsetime.