Inflation Does NOT Reduce Purchasing Power If

question 117

Multiple Choice

Inflation does NOT reduce purchasing power if:

• A) prices of essential products, such as food and gasoline, don't increase too much.
• B) nominal wages rise at the same rate as prices.
• C) it remains under 10% per year.
• D) the Federal Reserve increases the money supply enough to offset it.

---

Definitions:

Concepts

General ideas or understandings that can be used to group together objects, events, qualities, or abstractions that are similar in some way.

Visualized

The process of forming mental visual images of objects, scenarios, or outcomes.

Stubby Tail

A short or abbreviated tail appearing notably compact or truncated compared to the usual length for the species.

Heuristic

A problem-solving strategy that uses a practical approach or shortcut to produce solutions that are good enough for the situation.