Question : Which of the following statements is correct about the value of money?
i. It is directly related to the price level.
ii. It is not related to the price level.
iii. It is indirectly related to the price level.
Option 1: None of the statements are correct
Option 2: Only ii is correct
Option 3: Only iii is correct
Option 4: Only i is correct
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Correct Answer: Only iii is correct
Solution : The correct answer is Only iii.
The purchasing power of a unit of money is known as its value, and the average price of all goods and services within an economy is known as its price level. In other words, money loses value when prices rise, and vice versa. Thus, there is an inverse relationship between the level of prices in an economy and the value of money. It has an indirect connection to the level of prices.
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