Inflation

Question

Inflation

Quizplus · Accepted Answer

Inflation is defined as the rate at which the general level of prices is increasing. When the economy is considered to be "overheated," meaning that there is too much demand for goods and services relative to supply, inflation rates tend to be high. Therefore, choice D is the best answer as it encompasses both of these aspects of inflation. Choice A is only partially correct, as it defines inflation but doesn't account for the relationship between high inflation rates and an overheated economy. Choice B is incorrect, as high inflation rates can be a result of factors other than an overheated economy. Choice C is also incorrect, as there is often an inverse relationship between inflation and unemployment rates.