Answered: How does inflation affect the value of…

How does inflation affect the value of a currency? a. It has no effect on its value b. It increases its purchasing power c. It decreases its real value d. It increases its real value

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Open-economy Macroeconomics: Basic Concepts

Section: Chapter Questions

Problem 4CQQ

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Question

How does inflation affect the value of a currency? a. It has no effect on its value b. It increases its purchasing power c. It decreases its real value d. It increases its real value

Definition Definition Value of one unit of currency in terms of goods and services. Purchasing power refers to the ability of money to purchase goods and services at a particular point of time. As price levels in the economy increase, the purchasing power of one unit of currency decreases and vice versa.

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