When there is inflation,
A) average prices fall.
B) the value of money rises.
C) your standard of living rises if your income rises faster than the prices of what you buy.
D) the purchasing power of your savings rises.
E) your standard of living falls if your income rises faster than the prices of what you buy.

Question

Quizplus · Accepted Answer

During inflation, average prices rise, which means the purchasing power of money decreases. However, if your income rises faster than the prices of what you buy, you can still afford to maintain the same standard of living or even improve it. Therefore, option C is the correct choice.

When There Is Inflation