The clearest sign of inflation would be a(n)
A)increase in the price level.
B)increase in the quantity of total final output.
C)decrease in the quantity of total final output.
D)simultaneous increase in both output and prices.

Question

Quizplus · Accepted Answer

Inflation is defined as a sustained increase in the general level of prices for goods and services in an economy over a period of time. This means that the clearest sign of inflation would be an increase in the price level. Option B is incorrect because an increase in the quantity of total final output could be a result of an increase in productivity and not necessarily a sign of inflation. Option C is also incorrect because a decrease in the quantity of total final output could be caused by factors such as a recession or natural disasters and not necessarily a sign of inflation. Option D is incorrect because it is possible for prices to increase while output remains unchanged or even decreases.

The Clearest Sign of Inflation Would Be A(n)