Which of the following statements best describes the relationship between the real value or purchasing power of the monetary unit and the price level? The purchasing power of money:
A)and the price level varies inversely.
B)and the price level vary directly during recessions, but inversely during inflations.
C)and the price level vary directly, but not proportionately.
D)and the price level vary directly and proportionately.

Question

Quizplus · Accepted Answer

The purchasing power of money and the price level have an inverse relationship. When the price level goes up, the purchasing power of money goes down, and when the price level goes down, the purchasing power of money goes up. This is because as the price level increases, the amount of goods and services that can be purchased with a given amount of money decreases, and vice versa.

Which of the Following Statements Best Describes the Relationship Between