A measure of the value of money in an economy is the

Analyze the question: It asks which item measures the value of money in an economy. The question is really about what determines how much money can buy (its purchasing power).

Explain the concept: The value of money is its purchasing power, meaning the quantity of goods and services one unit of money can buy. This is inversely related to the general price level:

• When the general price level rises (inflation), each naira buys less, so the value of money falls.
• When the general price level falls (deflation), each naira buys more, so the value of money rises.

Economists measure changes in the value of money using price indices, such as the Consumer Price Index (CPI).

Solution, option by option:

• A. Size of workers: This relates to the labour force or population. It has nothing to do with what money can buy.
• B. General price: Correct. The general price level is the inverse measure of money's purchasing power.
• C. Total level of savings: This shows how much income is not spent. It does not measure what money can buy.
• D. Total amount of loans granted by banks: This is a measure of credit, or money supply, not of money's value.

Answer: The correct option is B. general price.

Exam tip: Remember that value of money = 1 ÷ price level. If a question links "value of money" with "purchasing power," look for an option mentioning prices, inflation, or a price index.