Value of Money And The Price Level - SS2 Economics Past Questions and Answers - page 1
What does the value of money refer to?
The purchasing power of a unit of currency
The total amount of currency in circulation
The exchange rate between different currencies
The interest rate on loans
What is the price level?
The average level of prices for goods and services in an economy
The total value of all goods and services produced in an economy
The rate of inflation in an economy
The interest rate on loans
What is inflation?
The rate at which the general price level is increasing over time
The rate at which the economy is growing
The rate at which the population is increasing
The rate at which the exchange rate is changing
How does inflation affect the value of money?
Inflation increases the value of money
Inflation has no effect on the value of money
Inflation decreases the value of money
Inflation has the opposite effect on the value of money depending on the country
What do central banks and governments do to manage inflation and maintain the value of money?
Use monetary and fiscal policies
Encourage more spending by consumers
Print more money
None of the above
In a simple sentence, what is the relationship between the value of money and the price level?
Why do central banks and governments want to maintain the value of money?