Question

Which of the following do consumers usually want to see rise with inflation?
A. Income
B. Interest rates
C. Money supply
D. Taxes

Answer 1

The correct answer would be the first choice "Income"

Answer 2

Answer:

The correct answer is option A.

Explanation:

Inflation refers to a sustained increase in the general price level. When the price level increases, the purchasing power of the consumer decreases. They need more money to purchase the same amount of goods.  

The real value of their cash balances decline. If the income of the consumer increases at the same rate as inflation their purchasing power will stay the same. So the consumers usually want their income to increase with inflation.