Purchasing power of the U.S. dollar

Imagine you have a dollar, and you really want a candy bar. You go to the store and the candy bar costs one dollar. You buy it and you're happy because you have a delicious candy bar.

Now imagine a few years pass and you still have that same dollar, but when you go to the store, the candy bar costs two dollars instead of one. That means your dollar can't buy as much as it used to.

The purchasing power of the U.S. dollar is like your one dollar bill. It's how much stuff that dollar bill can buy. When the purchasing power of the dollar is high, that means you can buy a lot with it. But when the purchasing power is low, you can't buy as much stuff with it because prices go up.

So if you had ten dollars with high purchasing power, you could buy ten candy bars. But if you have ten dollars with low purchasing power, you might only be able to buy five candy bars because the prices went up.

The government and other people who watch the economy try to make sure the purchasing power of the U.S. dollar stays strong, so you can buy lots of candy bars, toys, and other cool things with your money.