When there is inﬂation in the economy, it implies that the

Question

Quizplus · Accepted Answer

Inflation occurs when the general price level of goods and services in an economy is rising, meaning the price index is rising. As the price index rises, the purchasing power of money decreases, meaning that the same amount of money can buy fewer goods and services than before. Therefore, the correct choice is D - price index is rising and the purchasing power of money is falling.

When There Is Inﬂation in the Economy, It Implies That