Which of the following statements about inflation is correct?
A)Evidence from studies indicates that,in U.S.newspapers,inflation is mentioned less frequently than other economic terms,such as unemployment and productivity.
B)People believe the inflation fallacy because they tend to believe too strongly in the principle of monetary neutrality.
C)Nominal incomes are determined by nominal factors;they are not affected by real factors.
D)Inflation does not in itself reduce people's real purchasing power.

Question

Quizplus · Accepted Answer

Inflation does not reduce real purchasing power if nominal incomes rise at the same rate as inflation, maintaining the real value of income.

Which of the Following Statements About Inflation Is Correct