Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
It decreases inflationary pressures and raises the standard of living.
B
It increases inflationary pressures and lowers the standard of living.
C
It has no effect on inflationary pressures or the standard of living.
D
It decreases inflationary pressures but lowers the standard of living.
Understanding the Answer
Let's break down why this is correct
Answer
The Consumer Price Index (CPI) measures how much prices for everyday goods and services change over time. When the CPI increases, it usually means that prices are going up, which is a sign of inflation. This inflation can put pressure on people's budgets because they have to spend more money to buy the same things, making it harder for them to afford what they need. For example, if the price of groceries rises due to an increased CPI, families may struggle to buy enough food. As a result, while some people may earn more money, if their wages don't keep up with rising prices, their overall standard of living can decrease.
Detailed Explanation
When the Consumer Price Index goes up, it means prices for goods and services are rising. Other options are incorrect because Some might think rising prices mean less inflation and better living conditions; It's a common belief that price changes don't affect the economy.
Key Concepts
inflationary pressures
standard of living.
Topic
Understanding Consumer Price Index
Difficulty
medium level question
Cognitive Level
understand
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