Asked by Shanda Harrison on Apr 29, 2024
Verified
Suppose the price levels in an economy in four successive years are 100,120,133,and 140.Which of the following is true in such a case?
A) The economy is experiencing hyperinflation.
B) The economy is experiencing deflation.
C) The economy is experiencing inflation.
D) The economy is experiencing increasing inflation.
E) The economy is experiencing disinflation.
Hyperinflation
A very high rate of inflation.
Deflation
A decrease in the general price level of goods and services in an economy over a period, often leading to increased purchasing power of the currency.
Inflation
The rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.
- Gain an insight into the method of inflation rate determination and its relevance.
Verified Answer
SS
Steven StanleyMay 01, 2024
Final Answer :
C
Explanation :
The prices are increasing every year, meaning the economy is experiencing inflation. However, it is not hyperinflation as the prices are still increasing at a relatively moderate rate.
Learning Objectives
- Gain an insight into the method of inflation rate determination and its relevance.
Related questions
The Inflation Rate for 2007 Is Computed by Dividing (The ...
The Inflation Rate Is the Absolute Change in the Price ...
If the GDP Price Index Rises from 100 to 110 ...
The Consumer Price Index (CPI)overstates the True Inflation Rate Because ...
If the Consumer Price Index (CPI)rises Over a Year from ...