Homework Answers
Answer: C
This is the division of growth of money by growth of prices.
PP indicates purchasing ability by 1 unit of currency.
Amount of money and its growth in the economy increase purchasing power; but, such power reduces with the increase of rising or growth of prices.
Example: at $100 money and $10 price; PP = $100 / $10 = 10. Now, the growth of money is 10% and price at 12%; PP = $10 / $1.2 = 8.33 (decreases).
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