Question

11. Q11 Inflation is defined as a. a period of rising productivity in the economy. b. a period of rising income in the economy. c. an increase in the overall level of output in the economy. d. an increase in the overall level of prices in the economy.

Answer 1

d. an increase in the overall level of prices in the economy.

Step-by-step explanation:

Inflation is a measure used to analyse the variation of the prices of determined products or/and services in a period of time.

In a normal economy, inflation tends to rise every period; which means that the purchasing power of people decreases.

E.g. Last year you bought a pencil for $3; however, the same pencil this year is $3.3. So, you have to get more money to buy the same pencil, which means that the money has lost a part of its value.