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Questions
State running inflation impact on fixed income groups.
Explain the effects of inflation on the following:
Fixed income groups
Explain the impact of inflation on the fixed income group of people.
Solution
- Fixed-income earners (i.e., wage and salary earners, pensioners, etc.) suffer during inflation. It is because that their incomes do not increase in the same proportion in which prices or the cost of living rises.
- As a result, these fixed income earners tend to buy less amount of goods and services than before even when there is little rise in their income.
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