If a family's income doesn't change, but inﬂation is 3.5 percent, then the
A) family will need to spend more in order to maintain its standard of living.
B) family will need to spend less in order to maintain its standard of living.
C) family's standard of living is not affected by inﬂation.
D) family will need to spend the same amount in order to maintain its standard of living.

Question

Quizplus · Accepted Answer

Inflation means that the cost of goods and services increases over time. If a family's income doesn't change, but the prices of things they need to buy increase by 3.5%, they will have to spend more money to maintain their standard of living. This is because the purchasing power of their income has decreased due to inflation.

If a Family's Income Doesn't Change, but Inﬂation Is 3