GK
BANKING AWARENESS AND SEBI
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Value of money increases
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Purchasing power of money increases
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Purchasing power of money decreases
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Purchasing power of money remains unaffected
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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: -Purchasing power is the value of a currency expressed in terms of the number of goods or services that one unit of money can buy. It can weaken over time due to inflation. That’s because rising prices effectively decrease the number of goods or services you can buy.
Detailed explanation-3: -Inflation affects purchasing power by when the price of something rises, the purchasing power of money decreases.