Inflation:
A) is a rise in the prices of goods and services.
B) is a period of economic growth.
C) occurs when personal incomes increase at a faster rate than price levels.
D) is the period during which the economy is moving from recession to prosperity.
E) is a period of retrenchment for businesses and consumers.

Question

Quizplus · Accepted Answer

Inflation is defined as a general increase in the prices 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 reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy.