Question

If the inflation rate increases faster than their income, people will most likely

Answer 1

If the inflation rate increases faster than people's income (this is also known as hyperinflation), people will spend a HIGHER percentage of their income on basic needs. This is due to the fact that prices are higher (because of rising inflation).

For example, if a shirt costs $1.00 and a bag of chips costs $0.50, a woman could buy a shirt and bag of chips with $1.50 (let's pretend that her income is $1.50). However, if inflation causes the price of a shirt to rise to $1.50, and chips to $1.00, then the woman can only buy one of those things with $1.50. And she would spend it on the basic need; the shirt.

Hope this helps, let me know if you have any questions!

Answer 2

I think you forgot to attach the options along with the question. i am answering the question based on my knowledge and research. If the inflation rate increases faster than their income, people will most likely spend a lower proportion of their incomes on basic needs. I hope the answer has come to your help.