Question 42
Money and InflationA persistent rise in the general level of prices implies
- A.an increase in some prices
- B.a one-time rise in prices
- C.a steady fall in the purchasing power of money
- D.that the higher the price level, the more the value of money.
Show the answer and explanation
Answer: C (a steady fall in the purchasing power of money)
Explanation
When prices keep rising, each naira buys less and less, so the purchasing power of money falls.