Purchasing Power

What does it mean?
The ability to purchase goods and services, or the amount of goods and services that one unit of money can buy. In investment terms, it is the dollar amount of credit available to a customer to buy additional securities against the existing marginable securities in the brokerage account.

In Other Words...
During times of inflation, purchasing power decreases because of a decline in the value of the currency.

Related Links
All about Inflation Tutorial - What causes inflation? How does it affect your investments and standard of living? This tutorial has the answers.

Related Terms
Bracket Creep | Inflation | Initial Margin | Maintenance Margin | Minimum Margin | Personal Income | Purchasing Power Parity (PPP)

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