Inflation is:
A) the average number of times a dollar is spent on final goods and services in a year.
B) when people mistake changes in nominal prices for changes in real prices.
C) a decrease in the average level of prices.
D) an increase in the average level of prices.

Question

Quizplus · Accepted Answer

Inflation refers to an increase in the average level of prices over time. This means that the purchasing power of each unit of currency decreases, as more money is needed to buy the same amount of goods and services.

Inflation Is