Economics Inflation Questions
The impact of inflation on purchasing power is that it reduces the value of money over time. As the general price level rises, the same amount of money can buy fewer goods and services. This means that individuals and businesses have to spend more money to purchase the same goods and services they could have bought for less in the past. Inflation erodes the purchasing power of money, leading to a decrease in the standard of living for individuals and a decrease in profitability for businesses.