Question : In an inflationary situation, which of the following statements is false for a country?
Option 1: Profit rises faster than wages
Option 2: The value of money falls
Option 3: The cost of living rises
Option 4: The country's exports become more competitive
Correct Answer: Profit rises faster than wages
Solution : The correct answer is Profit rises faster than wages .
When there is inflation, profits can increase faster than salaries. This is because firms may frequently pass on the expenses of inflation to customers in the form of increased pricing. Furthermore, corporations may be able to minimise expenses by laying off people or lowering pay.
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