Suppose the price levels in four successive years are 100,120,133,and 140.Which of the following is true?
A)The economy is experiencing hyperinflation.
B)The economy is experiencing deflation.
C)The economy is experiencing inflation.
D)The economy is experiencing increasing inflation.
E)The economy is experiencing reflation.

Question

Quizplus · Accepted Answer

The price levels are increasing over the years, indicating that inflation is occurring in the economy. Hyperinflation would be a much quicker and more extreme increase in prices, while deflation would be a decrease in prices over time. Reflation refers to an attempt to stimulate the economy by increasing government spending or lowering interest rates, but this does not seem to be the case in this scenario. As for choice D, there is no evidence that the rate of inflation is increasing, just that it is occurring.

Suppose the Price Levels in Four Successive Years Are 100,120,133,and