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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.


Team Careers360 8th Jan, 2024
Answer (1)
Team Careers360 17th Jan, 2024

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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