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JAMB Economics 1985 Question 24

Question 24

Money and Inflation

The purchasing power of the naira will fall when

  1. A.the naira is devalued
  2. B.government cuts all salaries and wages
  3. C.there is inflation
  4. D.the colour of the naira is changed
  5. E.workers are retrenched.
Show the answer and explanation

Answer: C (there is inflation)

Explanation

Inflation is a general rise in prices, so each naira buys fewer goods.