Answer:
correct answer is C. 25 percent
Explanation:
solution
we relate purchasing power to the purchasing of product by consumer to investor for the prosperity of economy
so we consider here price index that is = 100
and it is rise to = 125
so that purchasing power will be decrease by x to the [tex]\frac{100x}{125}[/tex]
and money value will be lead to %change as
money value = [tex]\frac{x-\frac{100x}{125} }{x}[/tex] .................1
money value = 1 - 0.8
money value = 0.2
money value = 20%
so we can say that when we buy with 20% than purchase power will be fall as 25% increase in the price
so correct answer is C. 25 percent
