Prices go up is most closely associated with which economic phenomenon?

Prices go up is most closely associated with which economic phenomenon?

• A. Deflation
• B. Inflation
• C. Stagnation
• D. Recession

Answer: (B)

Prices rising over time signal inflation, the sustained increase in the general price level of goods and services. When inflation happens, money buys less than before, eroding purchasing power. It’s typically measured by indices such as the consumer price index. Deflation is the opposite—prices fall and money buys more. Stagnation means little or no economic growth, which concerns output and employment rather than a broad rise in prices. A recession is a period of declining economic activity, often with higher unemployment, not simply rising prices. Since the statement describes a general rise in prices, inflation is the best fit.

Prices rising over time signal inflation, the sustained increase in the general price level of goods and services. When inflation happens, money buys less than before, eroding purchasing power. It’s typically measured by indices such as the consumer price index. Deflation is the opposite—prices fall and money buys more. Stagnation means little or no economic growth, which concerns output and employment rather than a broad rise in prices. A recession is a period of declining economic activity, often with higher unemployment, not simply rising prices. Since the statement describes a general rise in prices, inflation is the best fit.