Question

if the inflation rate is positive, purchasing power is _______. The situation is reflected in the ______ rate of return on an investment, which will be ______ the ______ rate of return.

Answer 1

Answer:

If the inflation rate is positive, purchasing power is __reduced_____. The situation is reflected in the __low____ rate of return on an investment, which will be __reducing____ the __market____ rate of return.

Explanation:

Inflation is the general reduction in the value of a currency's purchasing power.  It happens when more money is used to buy the same quantity of a good or service than was purchased previously. A currency's purchasing power is the value of the currency in terms of the goods or services that it can buy.  Three factors reduce the purchasing power of a currency.  They are government regulations, inflation, and disasters.  On the other hand, deflation and technological innovations increase the currency's purchasing power.