Final answer:
The relationship between Confederate money in circulation and its value was one of currency devaluation, where inflation due to excessive printing of money and lack of confidence in the economy caused significant depreciation of the currency.
Step-by-step explanation:
The relationship between the amount of Confederate money in circulation and its value during the Civil War years is an example of currency devaluation. As the government continued to infuse more treasury notes into the economy, the purchasing power of the Confederate currency severely dropped. By 1865, it took $100 in Confederate money to buy what $1 could in 1861. This severe depreciation was due to inflation rates that soared, especially in the Confederacy, where they reached over 9,000 percent towards the end of the war. The inflation was partly a result of the Confederacy's monetary policy to print more money to finance the war effort, which was further exacerbated as economic stability was undermined by a lack of public confidence in the currency and the government. Such inflation significantly impacted the South's economy and the citizens' impact on trade and purchasing power.