February 1994 LSAT Section 1 Question 14

Once consumers recognize that a period of inflation has begun, there is generally an increase in consumer spending. T...

DianaK on February 7, 2024

Why A is wrong and E is right

I'm just confused on why E would be the right answer, considering salaries are also increasing during inflation. If salaries are increasing, wouldnt consumers still soend more if their salaries are increasing as well?

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DianaK on February 7, 2024

More specifically, it says "salaries are not keeping up with the pace" but it says in the stimulus that they are increasing

Emil-Kunkin on February 8, 2024

If salaries are not keeping pace with inflation then people are earning less in real terms. If prices rose ten percent but my salary only rises 5 percent, I won't be able to afford as much as I did the prior year.
This would explain why people don't make large purchases; they simply are unable to afford it anymore.