ECONOMICS
INFLATION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A Aggregate demand is increasing.
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B Aggregate supply is decreasing.
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C The interest rate is increasing.
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D The real value of money is decreasing.
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Detailed explanation-1: -In an inflationary environment, unevenly rising prices inevitably reduce the purchasing power of some consumers, and this erosion of real income is the single biggest cost of inflation. Inflation can also distort purchasing power over time for recipients and payers of fixed interest rates.
Detailed explanation-2: -The impact inflation has on the time value of money is that it decreases the value of a dollar over time.
Detailed explanation-3: -Inflation is one of the main factors that reduce the value of your money over time. It means that the money you have at the beginning of the year will get you lesser goods and services at the end of the year.
Detailed explanation-4: -The correct answer is Decreases. The value of money during inflation decreases.