Which of the following statements is true about Andy if the inflation rate is increasing every year by 1 percent and there is no growth in her salary?
A)Andy's gross domestic product will increase.
B)Andy's purchasing power will decrease.
C)Andy's employment opportunities will increase.
D)The annual growth in Andy's salary will be equal to the average inflation rate.
E)Andy's cost of borrowing will be less than 5 percent.

Question

Quizplus · Accepted Answer

If the inflation rate is increasing every year by 1 percent and Andy's salary remains the same, her purchasing power will decrease. This means that the amount of goods and services Andy can purchase with her salary will be reduced as the cost of goods and services increase due to inflation. None of the other statements are true in this scenario.

Which of the Following Statements Is True About Andy If