If there is a sudden jump in the inflation rate, the purchasing power of financial assets will immediately fall.

Question

Quizplus · Accepted Answer

Inflation erodes the value of money over time, which means that the same amount of money will be able to buy less in the future. This also affects financial assets such as stocks, bonds, and other investments. If there is a sudden jump in the inflation rate, the purchasing power of financial assets will immediately fall as the value of money decreases. This can result in lower returns on investments and a decrease in overall wealth.

If There Is a Sudden Jump in the Inflation Rate