2. What economic impact is most commonly associated with high inflation?
A. Increase in real wages
B. Strengthening of currency
C. Decrease in purchasing power
D. Lower import costs
Answer (1)
The answer is letter C. Decrease in purchasing powerInflation means the prices of goods and services are rising. When this happens too quickly, the value of your money drops. For example, if a kilo of rice used to cost ₱40 but now costs ₱50, your ₱100 will buy less food than before.This affects families, especially those with fixed incomes, because they can’t afford as much. Inflation also makes it harder for people to save money or plan for the future, and it can lead to unrest if prices keep rising uncontrollably.
