What would happen to the purchasing power of fixed income payments during rising inflation?

When inflation rises, the purchasing power of fixed income payments decreases. This is because fixed income payments, such as those from bonds or certain annuities, provide a set amount of money over time. As general prices increase due to inflation, the same amount of money buys fewer goods and services than it did before. For example, if you receive a fixed payment of $1,000 per month, but inflation causes the cost of living to increase significantly, that $1,000 will not stretch as far, effectively reducing your ability to purchase the same quantity or quality of items. This erosion of purchasing power is a critical concern for individuals depending on fixed income, making option C the correct response.