Answer
Increasing the price level decreases the value of each dollar in the economy. In turn, the power of each dollar to purchase goods decreases.
Work Step by Step
Example: You have 10 dollars, enough to purchase 3 apples (2 dollars each) and 4 peaches (1 dollar each). There is inflation of 10%, so apples are now 2.20 each, and peaches are 1.10 each.
You can now purchase 3 apples and 3 peaches (and have 10 cents left over).
