Answered

What is an example of an inflation risk?


A person’s income may drop


The price of an item can rise or fall


The rates of interest could rise or fall


A person might become ill or have another major problem arise

Verified Answer :

The price of an item can rise or fall

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Answer:

A person’s income may drop

Explanation:

Inflation is the continuous and widespread increase in prices over a given period of time. When inflation occurs, people's salaries must be corrected together. For example, if inflation is 5% per year, wages must increase by at least 5%, otherwise the person's purchasing power will be reduced, which means that the person's income has decreased. This is because with the same salary, the person can buy a smaller amount of inflated goods and services. For example, if with my salary I buy 10 fruits and an inflation of 10% occurs, but my salary does not increase, I will be able to buy only 9 fruits and not 10 more.

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