Question : For a country having an inflationary situation, which of the following statements is incorrect?
Option 1: The cost of living rises.
Option 2: Profit rises faster than wages.
Option 3: The value of money falls.
Option 4: The country's exports become more competitive.
Correct Answer: The country's exports become more competitive.
Solution : The correct answer is The Country's exports become more competitive .
Inflation can erode export competitiveness when other parameters are held constant. As prices rise domestically due to inflation, a country's goods and services become more expensive. It can reduce foreign demand for exports as foreign buyers seek cheaper alternatives elsewhere.
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