Inflation is
A)A rise in the price of every good but not any service.
B)An increase in relative prices of all goods and services.
C)A situation in which purchasing power increases.
D)An increase in the average level of prices of goods and services.

Question

Quizplus · Accepted Answer

Inflation is defined as an increase in the average level of prices of goods and services, which means that the purchasing power of money decreases. Option A is incorrect, since inflation affects the price of both goods and services. Option B is incorrect, since inflation does not necessarily cause an increase in the relative prices of all goods and services. Option C is also incorrect, as inflation usually reduces the purchasing power of money.

Inflation Is