There is a child Manav who receives Rs. 100 as his monthly pocket money. He used to spend his entire pocket money on purchasing Pokemon cards, each costing Rs.20. After few months, the price of Pokemon cards fell down to Rs. 10 and his pocket money remained same at Rs. 100. As price of Pokemon cards dropped, what happens to Manav's purchasing power?

First increases then decreases Increases Decreases Remains constant

Increases

Even though the pocket money is same at 100, the price of one Pokemon card has dropped from rs. 20 to rs. 10. As a result, Manav was earlier purchasing 100/20= 5 cards but now he can purchase 100/10= 10 cards. So his purchasing power has increased. Purchasing power is the amount of goods or services which a person can buy with given amount of money.