A major element of the concepts of inflation and deflation is
A) the idea that price changes are measured daily.
B) their dependence on average rather than individual prices.
C) the requirement that ALL prices must be moving in the same direction.
D) each household's willingness to report what they pay for goods and services each month.

Question

Quizplus · Accepted Answer

Inflation and deflation are based on the changes in average prices of goods and services in an economy over a period of time. It is not dependent on individual prices, but rather on the overall trend of prices. All prices do not have to be moving in the same direction for inflation or deflation to occur. Household reporting of prices is not a major element of inflation or deflation.

A Major Element of the Concepts of Inflation and Deflation