What are real value of money decreases?

The real value of money is like the number of candies you can buy, if that number gets smaller over time, we say the real value of money decreases.

Imagine you have a piggy bank with 10 coins. Each coin buys you one candy from the store. But one day, the store raises its prices, now each candy costs 2 coins. Even though your piggy bank still has 10 coins, you can only buy 5 candies instead of 10. That means the real value of money you have went down because each coin is worth less in terms of what it can buy.

Sometimes, when grown-ups print more money (like adding more coins to the economy), the price of things goes up, this is like having too many candies in the store. If there are way more candies than coins, each coin isn’t as powerful anymore. That’s why you might need more money to buy the same thing later.

It's a bit like sharing cookies, if everyone gets more cookies, each cookie doesn't feel as special anymore. The real value of money is like the number of candies you can buy, if that number gets smaller over time, we say the real value of money decreases.

Imagine you have a piggy bank with 10 coins. Each coin buys you one candy from the store. But one day, the store raises its prices, now each candy costs 2 coins. Even though your piggy bank still has 10 coins, you can only buy 5 candies instead of 10. That means the real value of money you have went down because each coin is worth less in terms of what it can buy.

Sometimes, when grown-ups print more money (like adding more coins to the economy), the price of things goes up, this is like having too many candies in the store. If there are way more candies than coins, each coin isn’t as powerful anymore. That’s why you might need more money to buy the same thing later.

It's a bit like sharing cookies, if everyone gets more cookies, each cookie doesn't feel as special anymore.