Which statement describes the effect of inflation on purchasing power?

a.
as the rate of inflation remains constant, purchasing power increases.
b.
as the rate of inflation remains constant, purchasing power stays the same.
c.
as the rate of inflation increases, purchasing power increases.
d.
as the rate of inflation increases, purchasing power decreases.

answer:

inflation reduces the value of a currency's purchasing power, having the effect of an increase in prices.purchasing power affects every aspect of economics, from consumers buying goods to investors and stock prices to a country's economic prosperity

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example 2 – simplify: step 1: completely factor both the numerators and denominators of all fractions. step 2: change the division sign to a multiplication sign and flip (or reciprocate) the fraction after the division sign; essential you need to multiply by the reciprocal. step 3 : cancel or reduce the fractions.