Question

What can be the possible impact of Inflation on Purchasing Power of Money?

A It reduces Correct Answer Incorrect Answer
B It increases Correct Answer Incorrect Answer
C It remains the same Correct Answer Incorrect Answer
D It can both reduce or increase Correct Answer Incorrect Answer
E None of the above Correct Answer Incorrect Answer

Solution

Purchasing power measures what a unit of currency can buy, while inflation measures rising prices. As inflation rises, purchasing power falls because one needs more units of currency to acquire the same basket of goods.

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