purchasing power investment & finance definition
- The
amount of goods or services that a defined amount of money can buy. Purchasing
power can be used as a proxy for measuring inflation. As inflation rises,
purchasing power erodes.
- How much
money someone can invest in a stock or financial market by using the maximum margin (amount of money that can be
loaned) that the brokerage firm makes available.
See purchasing power in Wall Street Words
- Consumer ability to purchase goods and services. Increased purchasing power represents proportionately larger increases in income than increases in the cost of goods and services.
- The ability to purchase goods and services with a fixed amount of money. Within this narrower application, purchasing power is inversely related to the consumer price index. Increased purchasing power is a signal that future increases in economic activity are likely.
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