Inflation exists when
A) the prices of ALL goods and services are rising.
B) the purchasing power of money is increasing.
C) the average price level is rising,although some prices may be falling.
D) the prices of basic necessities are increasing.
E) wages and the price of oil are rising.

Question

Quizplus · Accepted Answer

Inflation refers to a sustained increase in the average price level of goods and services in an economy over a certain period of time. This means that while some prices may still be falling, the overall trend is towards higher prices. Therefore, choice (C) is the best answer. The other choices are incorrect: (A) is too broad, (B) describes deflation, (D) is a limited view, and (E) only refers to specific factors that may contribute to inflation.

Inflation Exists When