Which describes inflation?

Which describes inflation?

• A. A decrease in the money supply
• B. A continuous rise in the price of goods and services
• C. A general increase in wages
• D. A rise in unemployment

Answer: (B)

Inflation is a sustained increase in the overall price level of goods and services in an economy, which means the prices we pay for things rise continually over time and purchasing power falls. The description that fits this idea is the one about prices increasing across a broad range of goods and services each period. The other options point to different ideas: changing the money supply can influence inflation but isn’t itself the definition of inflation, rising wages aren’t the same thing as rising prices, and a rise in unemployment signals weaker economic conditions rather than a general price increase.

Inflation is a sustained increase in the overall price level of goods and services in an economy, which means the prices we pay for things rise continually over time and purchasing power falls. The description that fits this idea is the one about prices increasing across a broad range of goods and services each period. The other options point to different ideas: changing the money supply can influence inflation but isn’t itself the definition of inflation, rising wages aren’t the same thing as rising prices, and a rise in unemployment signals weaker economic conditions rather than a general price increase.