Question

Which statement best describes what high inflation indicates about an economy? The purchasing power of a dollar remains the same as 15 years ago, so high inflation has no impact on the economy. A worker's salary today will buy the same amount of groceries for the same price as 10 years ago. Rising costs in housing, food, and utilities will likely have a negative impact on a family's standard of living. The government will not work to manage inflation when it is at high levels since there is no policy that has proven to be effective.

Answer 1

Answer: Rising costs in housing, food, and utilities will likely have a negative impact on a family's standard of living.

Explanation:

Inflation is a general rise in prices of goods and services in a country. If a country suffers from high inflation, goods and services will see their prices rise even more.

More often than not, people's wages do not rise as inflation rises or at least not at the same rate. This means that families will be unable to keep buying the goods they were normally able to buy as they can no longer afford it. Switching to inferior goods or neglecting to buy those goods anymore will have a negative impact on the standards of living of the families.