Explanation:

• Statement 1: If the prices of goods increase and you hold the same Rs.500 that you had a year back, you naturally can’t buy as much as you could earlier. So, the purchasing power of your money has reduced.
• Statement 2: It is not necessary. However, it is usually seen that high GDP growth induces some sort of inflation due to mismatch between supply and demand as a part of the growth process.
• Statement 3: it can work both ways, high international trade may flood local markets with goods and actually  reduce inflation by bridging the supply gap. Otherwise, it can even increase inflation, if the nation starts earning too much by exports and the income gained from exports is being spent domestically.
• Statement 4: It is real interest rates that are affected by high inflation rate and often reach near zero. This is  because inflation erodes the nominal interest rate gains.