Economic Awareness - Sectors of Indian Economy
Which of the following is a direct consequence of inflation on the value of money?
Which of the following is a direct consequence of inflation on the value of money?
easy Q1 of 15
Step-by-Step Solution
Step 1: Understand the effect of inflation on money
Inflation means a sustained rise in general price levels, which affects the real value of money.Step 2: Analyze the options
Inflation reduces the purchasing power of money, meaning each unit of currency buys fewer goods and services. Increase in real value or price stability contradict inflation's definition. Nominal wages may rise but are not a direct consequence on money's value.Final Answer:
Decrease in purchasing power → Option BQuick Check:
Inflation effect on money = Decrease in purchasing power ✅
Quick Trick: Remember inflation erodes money’s real value.
Common Mistakes:
- Confusing nominal wage increase with real value increase.
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