Question

The purchasing power of money and the price level vary: Group of answer choices inversely. directly during recessions, but inversely during inflations. directly, but not proportionately. directly and proportionately.

Answer 1

Answer:

Option "Inversely" is correct.

Explanation:

Option “Inversely” is correct because the increase in price level exhibits inflation and a rise in inflation decreases the purchasing power of money. However, if the price level decreases or inflation decreases, then the purchasing power of money increases. Therefore we can see that increase in price level decreases the purchasing power and a decrease in price level increases the purchasing power. Therefore, there is an inverse relationship.