Which of the following is true about inflation?
A) It reduces the cost-of-living of the typical worker.
B) It is measured by changes in the cost of a typical market basket of goods between time periods.
C) It causes the purchasing power of a dollar to rise.
D) It has no effect on real resources.

Question

Quizplus · Accepted Answer

Inflation is measured by changes in the cost of a typical market basket of goods between time periods. This means that the prices of goods and services have increased over time, leading to a decrease in the purchasing power of money. Inflation does not reduce the cost-of-living of the typical worker, nor does it cause the purchasing power of a dollar to rise. Additionally, inflation does have an effect on real resources as it can lead to a misallocation of resources within an economy.

Which of the Following Is True About Inflation