Question

Due to a rise in the general price level in an economy the purchasing power of
money
(A) rises
(C) remains constant
(B)
declines
(D)
none of these​

Answer 1

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When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy.