An increase in inflation will cause a reduction in which of the following?
A) the nominal value of money
B) the Producer Price Index
C) the GDP deflator
D) the real value of money

Question

Quizplus · Accepted Answer

Inflation causes a decrease in the purchasing power of money, resulting in a reduction in the real value of money. The nominal value of money remains the same, so option A is incorrect. The Producer Price Index and the GDP deflator are measures of inflation, so they are not directly affected by an increase in inflation, making options B and C incorrect.

An Increase in Inflation Will Cause a Reduction in Which