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QuizMultiple Choice

Inflation and Stagflation

Question 1 • * HSA 26-27 Economics

Which is the best definition of inflation?

Answer
A
a gradual decrease in the price of goods and services
B
a gradual increase in the price of goods and services
C
an exponential decrease in the price of goods and services
D
an exponential increase in the price of goods and services

Explanation

Inflation is a general, sustained rise in the prices of goods and services over time. A gradual increase means the same amount of money buys less than it did before. Therefore, the best definition is “a gradual increase in the price of goods and services.”

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