Question

Please help me I dont know the answer

Answer 1

They would use a higher proportion because let’s say you have $10 to spend and a bottle of water costs $1.

So now you buy the water, which uses up 10% of your budget for that day.

Now let’s say the price of the water goes up (which will represent inflation) but your $10 budget remains the same.

Now you spend $3 on a bottle of water and now you’ve spent 30% of your budget compared to the previous 10% when the water was only $1.

I hope this helped! Lmk if you have question still