Economics Inflation Questions
The impact of inflation on the cost of living is that it generally leads to an increase in the overall prices of goods and services. As inflation occurs, the purchasing power of money decreases, meaning that individuals can buy fewer goods and services with the same amount of money. This results in a higher cost of living as people need to spend more money to maintain their standard of living. Inflation can also lead to wage increases, but these may not keep up with the rising prices, causing a decrease in real income for individuals.