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Internal Value of Money

The internal value of money, often referred to as purchasing power, relates to the amount of goods and services that a unit of currency can buy within a country.

A stable or increasing internal value of money is generally associated with low inflation or deflation, allowing individuals and businesses to plan and make economic decisions more effectively.

Inflation, the rise in the general price level of goods and services, erodes the internal value of money. Conversely, deflation increases the internal value but may have negative implications for economic growth and employment.

See also

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