When output is held constant,inflation does which of the following?
A) Increases real GDP
B) Increases real income
C) Increases government spending
D) Reduces the purchasing power of individuals ?living on fixed incomes.

Question

Quizplus · Accepted Answer

When output is held constant, inflation reduces the purchasing power of individuals living on fixed incomes. This means that their money is worth less and they can buy fewer goods and services with the same amount of money. Inflation can also lead to higher prices for goods and services, making it harder for individuals to make ends meet. Therefore, option D is the correct answer. Options A, B, and C are incorrect as they do not describe the effect of inflation on output or purchasing power.

When Output Is Held Constant,inflation Does Which of the Following