24. In Hong Kong. the price elasticity of demand for MTR (Mass Transit Railway) rides is 0.4. When the price of a MTR ticket rises by 2 percent, A. the demand for MTR rides decreases by S percent B. the quantity of MTR rides demanded decreases by 0.8 percent C. the demand for bus rides increases by 5 percent D. the quantity of bus rides demanded increases by 0.8 percent 25. The price elasticity of demand for a good is 0.2. A 10 percent rise in the price will the total revenue from sales of the good. A. decrease E. increase decrease the quantity sold with no change in not change

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Inflation and Purchasing Power Theory

In economic terms, Inflation refers to the increase in the costs of various commodities which are used in daily lifestyle like food, clothes, transport, etc. over a specific time. It may lead to a fall in the purchasing power of the people and also affects the exchange rate of the currency because of the price increase. As the purchasing power falls the unit of the currency in the economy falls. When the prices of the commodities are decreased, then the purchasing power of the consumers will rise, then it will lead to deflation and changes the currency of the base economy to that of the foreign economy which will lead to change in exchange rates.