What is Inflation?

A child visits a fun fair with their dad, enjoying treats and games. The dad explains inflation using real-life examples, highlighting how prices increase over time due to demand and production costs. The child learns about the impact of inflation on purchasing power and the economy.

What treat did the narrator convince their dad to buy at the fun fair?

• Candy

• Ice cream

• Popcorn

• Cotton candy

What example does the father use to explain inflation?

• A balloon

• A car

• A bicycle

• A house

How does inflation affect the value of money?

• It increases the value of money

• It decreases the value of money

• It has no effect on the value of money

• It stabilizes the value of money

What happens to the purchasing power of money when inflation is high?

• Purchasing power increases

• Purchasing power decreases

• Purchasing power remains the same

• Purchasing power doubles

What is one reason for inflation mentioned by the father?

• Decrease in production costs

• Increase in demand

• Increase in supply

• Decrease in demand

Why did the price of the bike increase according to the father?

• Because there were too many bikes available

• Because the demand for the bike was high

• Because the bike was old

• Because the bike was unpopular

What example does the father use to explain the rising cost of production?

• A carton of milk

• A loaf of bread

• A pack of cookies

• A dozen eggs