Question

If the inflation rate is 4.8% per year, what will be the change in the purchasing power of your money over this period?

a) Increase by 4.8%
b) Decrease by 4.8%
c) Increase by 9.6%
d) Decrease by 9.6%

Answer 1

The change in purchasing power of the money over the period is a decrease by 4.8%.

Step-by-step explanation:

The inflation rate is the rate at which the general level of prices for goods and services is rising and, subsequently, purchasing power is falling. If the inflation rate is 4.8% per year, the change in the purchasing power of your money over this period would be a decrease by 4.8%. This means that your money will be able to buy 4.8% less goods and services than before due to the increase in prices.