Question

Sustained rise in the general price level is called inflation. Sharp rise in the inflation means purchasing power of money has decreased significantly. Inflation is considered as the tax as it leads to fall in the purchasing power which is amount to tax.

Consumer saves the money and keep it as the saving with bank. When inflation rises, the real value of interest decrease due to fall in purchasing power.

Answer 1

ANSWER Here the statement is teve ( This is because 'ruflation makes the savers of money worse off and the borrowed money better off, 2. This is because inflation reduces the purchasing Powcy of money and if you save money in Cash, the inflation leads to reduction in the effective values of savings and as time passes, the savings will buy a fewed quantity of goods. 3. on the other hand, borducts are better off because they will return money with low Purchasing pouco relative to the purchaising Powed of money when they botdowcd. 4. Thus, inflation makes boddowco's better of Sauers are worse off