Inflation is troublesome to consumers because of the following effects, except:
A) Household incomes may be rising slower than the overall prices
B) The purchasing power of people's savings would decrease
C) Workers' wages may be rising faster than the overall price level
D) The standard of living would fall if a household has a fixed nominal income

Question

Quizplus · Accepted Answer

Consumers would not be troubled if workers' wages rise faster than overall price levels as this would mean their purchasing power has increased. This would improve their ability to buy goods and services in the market. Inflation is considered problematic when prices rise faster than income levels or when the purchasing power of people's savings declines. This can lead to a decrease in the standard of living, especially if a household has a fixed nominal income.

Inflation Is Troublesome to Consumers Because of the Following Effects