If this year's price level exceeds last year's,
A) the inflation rate between these years has been positive.
B) deflation is occurring.
C) no relative price changes are occurring.
D) the inflation rate is accelerating.

Question

Quizplus · Accepted Answer

If the price level is higher this year than it was last year, then the inflation rate between the two years is positive. This is because inflation is defined as the rate at which the average price level of goods and services in an economy is increasing, and a rise in the price level indicates that inflation is occurring. Therefore, A is the correct answer.

If This Year's Price Level Exceeds Last Year's