Question

Assertion (A):
Inflation reduces the purchasing power of money.
Reason (R):
During inflation, prices of goods and services rise continuously.

• A. Both (A) and (R) are correct and (R) is the correct explanation of (A)
• B. Both (A) and (R) are correct but (R) is not the correct explanation of (A)
• C. (A) is correct but (R) is not correct
• D. (A) is not correct but (R) is correct

Hint:

Logic Tip: Inflation decreases the value of money because prices rise faster than purchasing capacity.

Answer 1

The Correct Option is A

Step 1:
Inflation refers to a continuous rise in the general price level.

Step 2:
When prices rise, the same amount of money buys fewer goods and services. Thus, purchasing power decreases.

Step 3:

• Assertion is correct
• Reason is also correct
• Reason properly explains the assertion

Step 4:
Hence, the correct answer is: \[ \boxed{\text{(1)}} \]