Suppose that the rate of inflation in a country is 5 percent.Which of the following statements is accurate?
A) This means all prices rise by 5 percent.
B) This means all prices rise, with an average rise of 5 percent.
C) This means all prices rise by at least 5 percent.
D) This means prices increase on average by 5 percent.

Question

Quizplus · Accepted Answer

Inflation rate refers to the average increase in prices of goods and services in the economy. Therefore, option D correctly states that prices will increase on average by 5 percent. It does not mean that all prices will rise by the same percentage, but rather some prices may rise more while others may rise less or even remain the same.

Suppose That the Rate of Inflation in a Country Is