The consequences of inflation can vary across different sectors and groups within an economy.Question 31Answera.Trueb.False

Analysis of the Statement

1. Understanding Inflation: Inflation refers to the general increase in prices of goods and services in an economy over a period of time. It leads to a decrease in the purchasing power of money.

2. Impact on Different Sectors: Inflation can affect various economic sectors differently. For example:

   • Housing Sector: Rising construction costs may lead to increased housing prices.
   • Food Sector: Agricultural commodities may experience different inflation rates based on supply chain disruptions.
   • Wages: Different occupations may not see wage increases that match inflation, affecting workers differently.

3. Impact on Groups: Different groups within the economy, such as low-income households, retirees, or wealthier individuals, can also be affected differently by inflation. For instance:

   • Low-income households may spend a larger proportion of their income on essentials like food and energy, impacting them more severely.
   • Wealthier individuals may benefit from inflation if their assets increase in value.

Conclusion

Given that inflation can indeed affect various sectors and groups differently, the statement is correct.

Final Answer

a. True