Correct Answer: Both assertion and reason are true, and the reason is the correct explanation of the assertion.

Solution : The correct answer is (a) Both assertion and reason are true, and the reason is the correct explanation of the assertion.

The assertion that inflation can worsen the poverty situation in a country is true. When prices rise due to inflation, the purchasing power of the currency decreases. This reduction in purchasing power disproportionately affects the poor, as they have limited financial resources. As a result, it becomes more challenging for them to afford essential goods and services, leading to a worsening of the poverty situation.

The reason provided accurately explains why inflation can worsen poverty. Rising prices erode the purchasing power of the poor, making it difficult for them to meet their basic needs. Inflation affects the affordability of essential items such as food, housing, healthcare, and education, which are critical for a decent standard of living. Consequently, the impact of inflation can be particularly severe for individuals and families already living in poverty.

Therefore, both the assertion and reason are true, and the reason correctly explains the assertion.