Question

How are inflation and purchasing power related to each other ?

Answer 1

Answer:

Purchasing power is the value of a currency expressed in terms of the amount of goods or services that one unit of money can buy.Purchasing power is important because, all else being equal, inflation decreases the amount of goods or services you would be able to purchase

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Answer 2

Answer:

Inflation reduces the value of a currency's purchasing power, having the effect of an increase in prices. To measure purchasing power in the traditional economic sense, you would compare the price of a good or service against a price index such as the Consumer Price Index (CPI).

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