Inflation means that:
A)all prices are rising, but at different rates
B)all prices are rising, and at the same rate
C)prices are rising in general, although some particular prices may be falling
D)real incomes are rising
E)real incomes are falling

Question

Quizplus · Accepted Answer

Inflation means that the general price level of goods and services is rising. However, some particular prices may still fall due to changes in supply and demand. Therefore, Option C is the best choice. Options A and B are incorrect because they suggest that all prices are rising, which is not necessarily true. Option D is incorrect because real incomes may remain stagnant or decline due to inflation. Option E is correct, but only in the case of hyperinflation, where prices rise at an extremely high rate, causing real incomes to fall drastically.

Inflation Means That