What is the term for the sustained increase in the general price level?

What is the term for the sustained increase in the general price level?

• A. Monetary policy
• B. Fiscal policy
• C. Inflation
• D. External shocks

Answer: (C)

Inflation is the sustained increase in the general price level of goods and services in an economy over time. When prices rise overall, the purchasing power of money falls, meaning the same amount buys fewer items. It’s typically measured with a price index, like the Consumer Price Index, which tracks changes in a basket of common goods and services. The emphasis is on “general” and “sustained,” not on a single price rise. Monetary policy and fiscal policy are actions used to manage inflation, while external shocks can influence inflationary pressures but are not the term itself.

Inflation is the sustained increase in the general price level of goods and services in an economy over time. When prices rise overall, the purchasing power of money falls, meaning the same amount buys fewer items. It’s typically measured with a price index, like the Consumer Price Index, which tracks changes in a basket of common goods and services. The emphasis is on “general” and “sustained,” not on a single price rise. Monetary policy and fiscal policy are actions used to manage inflation, while external shocks can influence inflationary pressures but are not the term itself.