The inflation rate
A) explains how prices are reacting to economic policies
B) indicates the level of prices charged by all firms in the economy
C) measures the annual percent increase in the average level of prices
D) measures how fast wages and incomes are rising
E) determines the prices that firms will offer to customers

Question

Quizplus · Accepted Answer

The inflation rate measures the annual percent increase in the average level of prices, which means it provides information about how prices are changing over time. It is not directly related to the prices charged by all firms in the economy, nor does it determine the prices that firms will offer to customers. Additionally, while inflation can influence wages and incomes, it does not directly measure how fast they are rising.

The Inflation Rate