Does inflation always destroy purchasing power? Explain 6+ sentences

Expert Solution

yes inflation always destroy the purchasing power:

inflation can be defined as the decrease in purchasing power of the money or the increase in price level.
purchasing power is the goods and service buying power of the money. The increase in prices of goods and services decrease the power of money to buy goods and services.
inflation and purchasing power have negative relation the increase in inflation rate means decrease in the purchasing power means we can buy less amount of goods and services from the unit of money.
inflation destroy the purchasing power as it decreases the demand for goods and services by people.
the increase in inflation reduces the real income of the people which leads to decrease in their aggregate demand due to low purchasing power of currency.
the high inflation decreases the savings due to increase in expenditure on consumption which leads to decrease in the future purchasing power of people as they have low savings

Rahul Sunny answered 1 year ago

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