Question

Jacob visits an auto repair shop. Due to the decrease in the value of money, he learns that a spark plug would cost him 15 percent more than what he had paid for last year. In this case, Jacob has to pay more as a result of _____.

Answer 1

Answer:

a) inflation

Explanation:

First, the multiple options for the question

a. inflation

b. technological lockout

c. recession

d. technological advancement

Explanation

Inflation is a measure in quantitative value and most in terms of percentage of the average increase in the price level of goods and services in an economy usually over a time period.

The effect of inflation is that a unit of currency this year for instance, will buy less goods or pay for less services than it was capable of in the prior period. This is also known as the decrease in a currency's purchasing power.  

As such, since Jacob in a new period is unable to use the same amount of money to buy a spark plug because it has gone up by 15 percent ( reduction of the purchasing power of the same currency as the prior period), then Jacob has to pay more due to inflation.

Answer 2

Answer:

Jacob has to pay more as a result of inflation.

Explanation:

As the price has increased 15%  due to decrease in the value of money from the last year. Thus this is a clear indication of inflation as inflation is defined as the rate at which the price of a specific good is increasing over the time.