Why are economists concerned about inflation?
A)Inflation generally causes unemployment rates to rise.
B)Real GDP is necessarily falling when there is inflation.
C)Inflation lowers the standard of living for people whose income does not increase as fast as the price level.
D)Inflation increases the value of people's savings and encourages overspending on goods and services.

Question

Quizplus · Accepted Answer

Inflation erodes purchasing power, meaning that if incomes do not rise at the same rate as inflation, individuals can afford less, thus lowering their standard of living.

Why Are Economists Concerned About Inflation