Definition

Monetary assets (such as cash and accounts receivable) and monetary liabilities (such as notes and accounts payable) that have a fixed exchange value unaffected by inflation or deflation. Holding monetary assets when prices are rising results in loss of purchasing power because the real value of currency is falling. Conversely, holding monetary liabilities during the same period results in gain in purchasing power because they can be repaid in a currency with real value lower than the currency in which they were incurred.

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