Answer:
Purchasing power is the value of a currency expressed in terms of the amount of goods or services that one unit of money can buy. Purchasing power is important because, all else being equal, inflation decreases the amount of goods or services you would be able to purchase.
Explanation:
Inflation reduces the value of a currency's purchasing power, because of effect of an increase in prices.
Purchasing power serves as the value of a currency which can be stated in term of number of goods or services that one unit of money can buy.
To measure purchasing power , we will need to compare the price of a good or service against a price index .
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