Samuel is barley able to pay his bills on time. He lives paycheck to paycheck. He just barley manages to keep food on the table for his family and pay his rent to keep a roof over their heads. What effect would a sudden rise in inflation have on him? Explain.

Question

Samuel is barley able to pay his bills on time. He lives paycheck to paycheck. He just barley manages to keep food on the table for his family and pay his rent to keep a roof over their heads. What effect would a sudden rise in inflation have on him? Explain.

a. He would find it more difficult to meet his family's basic needs since everyday goods such as food would become more expensive.
b. He would find it more difficult to meet his family's basic needs since his income level would decrease, and he would have less money to buy everyday goods such as food
c. He would find it easier to meet his family's basic needs and may even have extra income since everyday goods such as food would become cheaper.
d. He would find it easier to meet his family's basic needs and may even have extra income since his rent would decrease.

Answer 1

The correct answer is a. He would find it more difficult to meet his family's basic needs since everyday goods such as food would become more expensive. Inflation is the general increase in prices of goods and services over time. When there is a sudden rise in inflation, the cost of everyday goods such as food, rent, and utilities would increase. Since Samuel is already struggling to pay his bills and meet his family's basic needs, a rise in inflation would make it even more difficult for him to afford the increased prices of essential items. His income level would remain the same, but the purchasing power of his income would decrease, leaving him with less money to buy the same amount of goods.