Inflation refers to the situation when
A) the prices of necessities increase.
B) the average of all prices is increasing.
C) all prices rise by the same rate.
D) the rate at which prices are rising is rising.

Question

Quizplus · Accepted Answer

Inflation is characterized by a general increase in the average of all prices over a period of time. Option A is incorrect because even if only the prices of necessities increase, it does not necessarily mean there is inflation. Option C is incorrect because not all prices necessarily rise at the same rate. Option D is incorrect because the rate of increase in prices can remain constant over time and still be considered inflation.

Inflation Refers to the Situation When