Which of the following is an effect of inflation?
A)Erosion in purchasing power
B)Affects relative price of goods
C)Increase in inequalities of income
D)All the above

Question

Quizplus · Accepted Answer

Inflation leads to erosion in purchasing power as money buys fewer goods and services. It affects the relative price of goods, making some more expensive relative to others. Inflation can also increase income inequalities, as it may impact different income groups differently, often hitting those with fixed incomes harder.

Which of the Following Is an Effect of Inflation