Question

Assertion (A): As a result of inflation money loses its value.

Reason (R): During inflation, money no longer buys as much as it did it in previous times.

Options

• Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

• Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A).

• Assertion (A) is true but Reason (R) is false.

• Assertion (A) is false but Reason (R) is true.

Answer 1

Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

Explanation:

The assertion is true because, during inflation, the value or purchasing power of money declines. The reason is also correct because when the costs of products and services grow, the same amount of money may purchase fewer things and services than before. During inflation, money loses purchasing power. As a result, the reason accurately explains why money loses value due to inflation.