Which of the following correctly defines inflation?
A) An increase in the price of a particular good or service.
B) An increase in the general (average) price level of goods and services in the economy.
C) The growth rate in real GDP.
D) None of the above.

Question

Quizplus · Accepted Answer

Inflation refers to the increase in the general price level of goods and services in the economy over a period of time. It is usually measured by an inflation index, such as the Consumer Price Index (CPI), which tracks the change in prices for a basket of goods and services consumed by a typical household. Option A only refers to a specific good or service, while option C refers to growth in real GDP, which is a different economic indicator. Option D is incorrect as one of the options is correct.

Which of the Following Correctly Defines Inflation