The Contemporary World Practice Exam

Which term means a general rise in prices over time?

Deflation Stagnation Inflation Stagflation

Correct Answer:

Inflation

Explanation:

Inflation is the general rise in prices over time, meaning the overall price level increases and money buys fewer goods and services. This contrasts with deflation, where prices fall; stagnation, which refers to little or no economic growth (often with low inflation); and stagflation, which is high inflation occurring alongside stagnant growth and unemployment. So the term that best describes a general rise in prices over time is inflation.

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