Inflation means:
A)all prices are rising, but at different rates.
B)all prices are rising and at the same rate.
C)each unit of a currency (such as Canadian dollar) buys more goods and services.
D)the continual rise in the general level of prices.

Question

Quizplus · Accepted Answer

Inflation refers to the general rise in prices of goods and services over time. This means that the purchasing power of a currency decreases as prices of goods and services increase. Option D best describes this phenomenon. Option A is incorrect because all prices might not be rising, and even if they do, they would be at different rates. Option B is incorrect because prices might not be rising at the same rate. Option C is incorrect because it describes deflation, where the purchasing power of currency increases as prices of goods and services decrease.

Inflation Means