Question

The purchasing power of people with _____ decreases a lot when inflation occurs.

Answer 1

If people's income rise at a rate equal or higher to inflation, then their puchasing power would stay the same despite inflation.

The correct answer is the other one: fixed incomes.

Answer 2

Answer:

The purchasing power of people with fixed incomes decreases a lot when inflation occurs.  

Explanation:

The people who, every month, obtain a fixed income as compensation for their work, are the most affected in cases of inflation. This is because inflation generates higher prices and lower purchasing power of money, so more and more money is necessary to buy the same good. Therefore, this results in a direct loss for those who have a fixed income, since inflation occurs before employers raise their wages, thus losing purchasing power.