What term describes an increase in the price of goods and services and a decrease in the value of money?

What term describes an increase in the price of goods and services and a decrease in the value of money?

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

Answer: (B)

Inflation describes an increase in the price of goods and services and a decrease in the value of money. As prices rise, the same amount of money buys fewer goods, so purchasing power falls. This change is typically tracked with measures like the consumer price index to show how much the overall price level has climbed. Inflation happens for various reasons, such as demand growing faster than supply or the money supply expanding more quickly than the economy can absorb, which erodes the currency’s value. A depression is a prolonged, severe economic downturn. A recession is a period of declining economic activity, usually lasting a short to moderate time. Deflation is the opposite of inflation, with prices falling and money gaining value.

Inflation describes an increase in the price of goods and services and a decrease in the value of money. As prices rise, the same amount of money buys fewer goods, so purchasing power falls. This change is typically tracked with measures like the consumer price index to show how much the overall price level has climbed. Inflation happens for various reasons, such as demand growing faster than supply or the money supply expanding more quickly than the economy can absorb, which erodes the currency’s value.

A depression is a prolonged, severe economic downturn. A recession is a period of declining economic activity, usually lasting a short to moderate time. Deflation is the opposite of inflation, with prices falling and money gaining value.