Inflation is best described as a situation in which
A) relative prices are changing.
B) some prices are rising faster than others.
C) relative prices are changing, but the purchasing power of the dollar is unchanged.
D) the average of all prices are on a sustained rise over a period of time.

Question

Quizplus · Accepted Answer

Inflation is a sustained increase in the average of all prices over a period of time. Option A and B describe a situation of changing relative prices, but not necessarily inflation. Option C is incorrect as inflation by definition results in a decrease in the purchasing power of money.

Inflation Is Best Described as a Situation in Which