Glossary term
Purchasing power
Purchasing power describes what a dollar amount can buy after considering prices and inflation.
Plain meaning
What purchasing power means
Purchasing power focuses on what money can buy, not only the number of dollars. If prices rise, the same dollar amount can have less purchasing power.
Formula role
How OpenBook uses it
OpenBook calculators may show future-dollar amounts and today's-dollar amounts. Today's-dollar amounts are intended to help compare future values with current purchasing power.
Common confusion
More dollars can still buy less
A future amount may be higher in dollars but lower in purchasing power if inflation outpaces growth. That is why some calculators show both nominal and inflation-adjusted results.