What is the impact of inflation on inclusive growth?
Practice Questions
Q1
What is the impact of inflation on inclusive growth?
It always benefits the poor
It can erode purchasing power
It has no effect on growth
It increases savings
Questions & Step-by-Step Solutions
What is the impact of inflation on inclusive growth?
Step 1: Understand what inflation is. Inflation means that prices of goods and services increase over time.
Step 2: Recognize that when prices go up, the money people have buys less than before. This is called eroding purchasing power.
Step 3: Identify who is most affected by inflation. The poor and low-income families are often hit hardest because they spend a larger portion of their income on basic needs.
Step 4: Consider how inflation affects inclusive growth. Inclusive growth means that everyone in society benefits from economic progress.
Step 5: Realize that if inflation makes it harder for the poor to afford basic needs, it can slow down or stop inclusive growth.
Step 6: Conclude that inflation can create inequality, making it difficult for all groups in society to thrive together.
