When inflation occurs, consumers
A)realize gains in their wealth.
B)increase spending to catch up with higher prices.
C)automatically shift the consumption line upward.
D)suffer a decrease in real wealth.

Question

Quizplus · Accepted Answer

When inflation occurs, prices of goods and services increase, but the value of money decreases. This means that consumers can buy fewer goods and services with the same amount of money, resulting in a decrease in their real wealth. Therefore, option D is the correct answer.

When Inflation Occurs, Consumers