Question

Melita heard that there had been inflation last month. She laughed and did not believe it. When asked why not, she said that last week she spend less at the grocery store because the cost of food had come down. What is the correct response?

Answer 1

Answer:

Melita is incorrect

Explanation:

Based on the information provided within the question we can say that the correct response would be that Melita is incorrect. This is because even though Melita paid less because food costs have gone down, it does not mean that all products have gone down in price. Therefore if other products have risen in price, then the purchasing power of the local currency would have decreased, and thus causing inflation.