Financial Planner

Answer: D - Loss of currency value is an example of the negative effects of inflation on a local economy.
Key Takeaway: When a currency loses its value, it diminishes purchasing power and has adverse effects on local economies. High inflation rates can lead to a local currency losing a great deal of its value if not kept in check. For example, a country with a collapsed agricultural output such as Zimbabwe will find its local currency devalued so much that it is rendered worthless for individuals to purchase goods and services.