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How did wartime inflation affect the real income of ordinary Indians?

Answer and explanation

Correct answer: The purchasing power of income decreased

The governing concept is real income, which depends on what money can actually buy rather than only on the number of rupees earned. During the First World War, prices of essential goods rose sharply because of wartime pressures and shortages, while ordinary earnings did not increase at the same rate. Thus, even if nominal wages remained unchanged, each rupee bought fewer goods. Option A is correct; the other options contradict the effects of inflation.

Related tags

InflationReal IncomeWar EconomyNationalismThe First World WarKhilafatAnd Non CooperationThe First World War Khilafat And Non CooperationChapter 2: Nationalism In IndiaChapter 2 Nationalism In India

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