Question

Which of the following will cause a decrease in the standard of living for an individual?

1) Increase in income
2) Decrease in expenses
3) Increase in inflation
4) Increase in savings

Answer 1

An increase in inflation will decrease the standard of living, as it erodes the purchasing power of money, while an increase in income, decrease in expenses, or increase in savings tends to improve it.

Step-by-step explanation:

The standard of living for an individual can be impacted by a variety of factors. Among the options provided, increase in inflation will cause a decrease in the standard of living for an individual. Inflation erodes the purchasing power of money, meaning each unit of currency buys fewer goods and services, leading to a lower standard of living if income does not increase proportionately. In contrast, an increase in income, a decrease in expenses, or an increase in savings would typically be associated with an improvement in standard of living, as these factors enable an individual to afford more or save more, thus enhancing their economic stability and ability to consume goods and services.