Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
It increases purchasing power immediately.
B
It decreases purchasing power if wages do not keep pace with inflation.
C
It has no effect on the standard of living.
D
It only affects the wealthy negatively.
Understanding the Answer
Let's break down why this is correct
Answer
Inflation is when prices for goods and services rise over time, which can affect how much people can buy with their money. When inflation occurs, the same amount of money buys less than before, meaning that individuals may struggle to afford the same things they used to. For example, if the price of groceries increases but people's incomes stay the same, they may have to cut back on what they buy or choose cheaper options. This can lead to a lower standard of living because people may not be able to enjoy the same quality of life. Therefore, if wages do not keep up with inflation, it can make life more challenging for many individuals in the economy.
Detailed Explanation
When prices go up due to inflation, people can buy less with the same amount of money. Other options are incorrect because Some might think inflation makes money worth more right away; It's a common belief that inflation doesn't change anything.
Key Concepts
Inflation
Topic
Inflation and Standard of Living
Difficulty
easy level question
Cognitive Level
understand
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