Question

Which best defines the word inflation as it is used in the third paragraph?
a. When the value of a currency drops
b. To increase the size of a balloon by blowing air into it
c. When the same amount of money purchases more than in the past
d. When the pictures on the money change

Answer 1

Answer:

(a.) When the value of a currency drops.

Answer 2

The word 'inflation' can be defined as (a) When the value of the currency drops.

• The passage mentions how the value of money can change over time. Money is given so much importance but it can come to a point where there is no value.
• In the passage, we can see the mention of the German currency. The germans called their money Marks. Both Germany and France were fighting each other at the war which cost them a lot. France managed the money by taxing their citizens whereas Germans borrowed money.
• Germans borrowed so much money that their currency dropped. Starting world war I, one US dollar would cost four german marks and by the end of the war, one US dollar was nine German marks. This means that they had to pay twice the amount they used to before.
• This was called inflation since the value of the currency drops in terms of US dollars.

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