Which of the following statements is true about Andy if the inflation rate is increasing every year by 1 percent and there is no growth in his salary?
A)Andy can afford to buy more luxury items as prices go down.
B)Andy's purchasing power will decrease.
C)Andy's employment opportunities will increase.
D)The lack of growth in Andy's salary will increase the average inflation rate .
E)Andy's cost of borrowing will be reduced.

Question

Quizplus · Accepted Answer

Andy's purchasing power will decrease because as the inflation rate increases without a corresponding increase in his salary, the value of money decreases, meaning he can buy less with the same amount of money.

Which of the Following Statements Is True About Andy If