Purchase power is a measure of how many goods or services you can buy with a unit of currency. The currency might be a commodity, such as gold, silver, or a government-issued currency, such as the US dollar (USD).  "Imagine that you make the same salary as you did twenty years ago," says Robert Johnson, a professor of finance at Creighton University's Heider College of Business and CEO and chairman of the Economic Index Associates. "You would be able to buy considerably fewer goods because the prices of those goods (denominated in dollars) have generally risen." If you haven't experienced this first hand, you may have heard someone talk about how they used to buy a soda, sandwich, or gasoline for much less money back in "their time."