Martha visits a departmental store and discovers that a box of exotic candles will cost her ten percent more than what she had paid six months ago. The increase in prices is the same across the country. In this scenario, which of the following statements is true?
A)She would have immediate purchasing power if she had a pay raise to match the inflation.
B)She has to pay twelve percent more than what she paid last month.
C)The departmental store is trying to earn more profits by increasing the prices of its goods.
D)The candles' subjective value increases with the increase in inflation.

Question

Quizplus · Accepted Answer

If Martha received a pay raise that matched the inflation rate, her purchasing power would remain the same, allowing her to afford the candles despite the price increase.

Martha Visits a Departmental Store and Discovers That a Box