What usually happens when there is inflation in a country as regards this ques is that B: There's more money in circulation and the prices rise.
Inflation can be regarded as measurement of how the prices of good as well as services is going higher. It usually happen when the price of goods increases as a result of increase in the cost of production.
These cost of production could be
raw materials
wages
Labor cost
However ever , when there is very high increase in demands, then inflation can comes in because the consumer has willingness to pay more for a particular product.
Therefore, option B is right.