When Inflation Occurs, the Purchasing Power of Money

question 98

Multiple Choice

When inflation occurs, the purchasing power of money:

• A) rises.
• B) falls.
• C) remains the same.
• D) could rise, fall, or remain the same.

---

Definitions:

Financial Statement

An orderly enumeration of monetary activities and financial health of an entity, be it a business, individual, or something else.

Financial Statement

A comprehensive report detailing a company's financial performance, position, and cash flows over a specific period.

Normal Balance

The side (debit or credit) of an account that is expected to have a higher balance based on accounting principles.

Drawee

In financial terms, this is the entity upon which a cheque or draft is drawn and is responsible for paying the amount.