Inflation necessarily occurs when:
A) the price of gasoline rises.
B) a greater number of goods increase in price compared to the number of goods that undergo a price decrease.
C) the overall price level rises.
D) there is an increase in the rate of change in the price level.
E) the price of at least one good, but possibly more than one good, in the economy increases.

Question

Quizplus · Accepted Answer

Inflation refers to a sustained rise in the overall price level of goods and services in an economy, and not just the price increase of a single good or a few goods. Therefore, options A and E are incorrect. Option B suggests a scenario where some goods have increased in price but some have decreased, thus not leading to an overall increase in the price level, making it incorrect. Option D is incorrect as it refers to the rate of change, and not the actual rise in the price level. Therefore, the correct answer is C - inflation occurs when the overall price level of goods and services in an economy increases.

Inflation Necessarily Occurs When