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Inflation exists when there is:

  1. A
    a general increase in the prices over time.
  2. B
    periodic decreases in the price level.
  3. C
    continuous increases in the output level over time.
  4. D
    a rise in the purchasing value of money.

Solution & Step-by-step Explanation

Inflation is a sustained, general increase in the price level of goods and services in an economy over a period of time. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reduction in the purchasing power of money.

Practice this question

Try it yourself before checking the explanation above.

Inflation exists when there is:
A
a general increase in the prices over time.
B
periodic decreases in the price level.
C
continuous increases in the output level over time.
D
a rise in the purchasing value of money.

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