Final answer:
When inflation increases, the value of money decreases because inflation erodes the purchasing power of money over time.
Step-by-step explanation:
When inflation increases, the value of money decreases. This is because inflation erodes the purchasing power of money over time. As prices rise, the same amount of money can buy fewer goods and services. To illustrate, let's say you have $100 today. If the inflation rate is 5%, next year that same $100 will only have the purchasing power of $95 due to the increased prices.
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