Multiple Choice Question

Question

Stabilization of the purchasing power of a nation's money requires stabilization of the nation's price level, because the purchasing power of money and the price level vary in what way?
Multiple choice question.

Exponentially

Directly

Inversely

Fractionally

Answer 1

The correct answer is Inversely.

The purchasing power of money decreases as the price level increases, and vice versa. Thus, there is an inverse relationship between the purchasing power of money and the price level.