Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Inflation increases purchasing power, improving quality of life
B
Inflation decreases purchasing power, potentially worsening quality of life
C
Inflation has no effect on purchasing power or quality of life
D
Inflation only affects purchasing power for wealthy individuals
Understanding the Answer
Let's break down why this is correct
Answer
Inflation is when prices of goods and services rise over time, which means that the money people have can buy less than it used to. This decrease in purchasing power makes it harder for individuals to afford the same amount of things they could before, such as food, housing, and transportation. For example, if a loaf of bread costs $2 today but rises to $2. 50 next year, someone with the same amount of money can buy fewer loaves than before. As a result, people may have to cut back on spending or make tough choices about what to buy, which can lower their overall quality of life.
Detailed Explanation
When prices go up due to inflation, money buys less than before. Other options are incorrect because Some might think that rising prices mean more money to spend; It's a common belief that inflation doesn't change anything.
Key Concepts
Purchasing Power
Quality of Life
Topic
Inflation and Standard of Living
Difficulty
medium level question
Cognitive Level
understand
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