The Rate of Inflation and the Purchasing Power of Money

question 294

Multiple Choice

The rate of inflation and the purchasing power of money are

• A) positively related.
• B) totally unrelated.
• C) inversely related.
• D) randomly related.

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Definitions:

Interest Rates

The charges levied by lenders on borrowers for the privilege of using the lender's money, expressed as a proportion of the borrowed amount per unit of time.

U.S. Dollar

The official currency of the United States, which serves as a major reserve currency and is used in many international transactions.

Federal Budget Surplus

A financial situation where the government's revenue exceeds its expenditures within a fiscal year.

Federal Outlays

Government spending or expenditures, including on services, social security, defense, and interest on debt.