In his ear, he whispers gaily.
Is "in his ear" a prepositional or an adverbial phrase?
Please explain your choice and give some reasons for your answer. Thanks!
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It is both.
The term preposition phrase describes the phrase's internal structure: it is constructed with a preposition followed by its object.
The term adverbial phrase describes the phrase's external syntactic role: it designates the place where the action was directed and is taken to "modify" the action in the same way as an adverb like softly or angrily would.