Answer:
The situation that best illustrates the effects of inflation is:
C) A consumer notices that the price of groceries has significantly increased over the past year.
Step-by-step explanation:
Inflation is the sustained increase in the general price level of goods and services over time. When the price of groceries or everyday goods and services rises noticeably, it is a clear indication of inflation. In this situation:
Consumers experience a decrease in their purchasing power because their money buys less than it did before.
People may need to allocate a larger portion of their income to cover the rising cost of essential items like food.
Savers may see the real value of their savings erode as the purchasing power of their money declines.
Businesses may face increased production costs, which can lead to price increases for their products.
Central banks and governments may implement measures to control or manage inflation to maintain economic stability.
Inflation can have a wide-ranging impact on individuals, businesses, and the overall economy, making it a significant economic phenomenon.