For example, if you took one unit of cash to a store in the 1950s, you could buy more products than you could now, showing that the currency had more purchasing power back then.
Inflation does not always result in decreased purchasing power, especially if income exceeds price levels.
Traditionally, the purchasing power of money depended heavily upon the local value of gold and silver, but was also made subject to the availability and demand of certain goods on the market.
[1] Most modern fiat currencies, like US dollars, are traded against each other and commodity money in the secondary market for the purpose of international transfer of payment for goods and services.
Scottish economist Adam Smith noted that having money gives one the ability to "command" others' labor, so purchasing power to some extent is power over other people, to the extent that they are willing to trade their labor or goods for money or currency.