An investor observes that over the past year, the general price level of goods and services increased by 5%. If this investor had held their wealth entirely in physical currency during this period, which statement best analyzes the change in their purchasing power?
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An investor observes that over the past year, the general price level of goods and services increased by 5%. If this investor had held their wealth entirely in physical currency during this period, which statement best analyzes the change in their purchasing power?
In any economic environment, holding physical currency for a year will always result in a loss of purchasing power.