Have you ever wondered how much is $100 worth? A new study reveals the purchasing power of the dollar across the U.S. to provide a valid answer to this question. The results of the financial research prove what some consumers might have long inferred, namely, that American goods and products have a different value, depending on the states they are being commercialized in.
The financial research was conducted by the Bureau of Economic Analysis pertaining to the U.S. Department of Commerce by comparing the different value prices that were registered in 2013 in various American states. As one might expect, it turns out that $100 does not have the same purchasing power all across the territory of the United States. In some cases, the difference turned out to be much bigger than experts had initially expected.
According to the list provided by the Bureau of Economic Analysis, the states where the value of $100 reaches the highest levels are Alabama, West Virginia, South Dakota, Mississippi, Alabama and Arkansas. At the opposite pole, the same amount of money ($100) appears to be much more insignificant in New York, New Jersey, California, Hawaii and the District of Columbia.
There are many factors that contribute to the said difference in the purchasing power of the American currency and these will most certainly constitute the subject of future studies. For the moment, scientists have only limited themselves to identifying the financial discrepancies between every region.
The study also indicates that the financial discrepancy between American states is unexpectedly big. The purchasing power of the dollar is 36 percent bigger in Mississippi than in the District of Columbia. Nevertheless, the dollar seems to be recovering its position as statistics have shown that the value of $100 has increased by 24 percent in 2014.
The first consequence that derives from these differences in the purchasing power of the dollar is the fact that products and goods have different costs across the American states, based on the region they are being commercialized in.
For that matter, residents in the high-end states often have to pay more for the same product that is being sold at cheaper rates in low-end regions like Mississippi. One might be tempted to say that higher income rates could make up for this difference, but the BEA claims this is the main factor that has contributed to this price discrepancy.
In their opinion, the more the residents of a certain state win on a monthly basis, the more they have to pay for the same products and services. The situation is totally different in regions with lower income rates, where products are cheaper. This practice is called compensating differential, because it does just that, namely, it uses higher prices to compensate for the weak purchasing power of the money.
The current study will most likely be complemented through additional financial experiments to provide a comprehensive description of the financial situation in the United States. This data could later on, alter the significance of poor and rich states because incomes are established by price levels.
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