Desde Investopedia

TERM OF THE DAY

Purchasing Power Purchasing power is the value of a currency expressed in terms of the amount of goods or services that one unit of money can buy. Purchasing power is important because, all else being equal, inflation decreases the amount of goods or services you would be able to purchase. In investment terms, purchasing power is the dollar amount of credit available to a customer to buy additional securities against the existing marginable securities in the brokerage account. (For further insights, see: Buying Power)

Breaking it Down: To measure purchasing power in the traditional economic sense, you would compare against a price index such as the Consumer Price Index (CPI). A simple way... Read More