Questions and Answers
When demand-pull inflation occurs, what happens to purchasing power?
It increases
When inflation is high, if the increase in price is greater than the increase in nominal income, ______ power decreases.
purchasing
Consumers who live off their ______ are especially affected by a decrease in the value of savings due to inflation.
savings
Who is most affected by the decrease in the value of savings due to inflation?
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When inflation occurs, lower-income consumers are more adversely affected as a higher proportion of their income is spent on ______ goods.
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When inflation occurs, the real income of ______-income earners remains stable, while that of fixed-income earners decreases.
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When inflation occurs, if nominal i/r remains unchanged, savers/lenders are adversely affected as money received (interest or repayments) has lower purchasing ______ vs. money deposited or lent; converse applies to borrowers.
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How are fixed-income earners affected when inflation occurs?
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Study Notes
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Description
Test your knowledge of the effects of inflation on purchasing power, savings value, and different consumer groups. Learn how demand-pull inflation impacts fixed-income earners and lower-income consumers.
