Question

What is inflation? an increase in the amount of money in circulation an increase in the overall price level a decrease in the overall price level an increase in the overall level of economic activity Which of the examples provides the best evidence that inflation has occurred?

Answer 1

Answer:

increase in the overall price level

Explanation:

Inflation refers to the general increase in prices of goods and services in the economy over time. An increase in aggregate demand, accelerated economic growth, and an increase in the cost of supplies causes inflation. The rate at which prices increase is called the inflation rate. It is measured by the Consumer price index or the GDP deflator.

Inflation results in a decline in the purchasing power of a country 's currency. The government sets a certain desired level of inflation rate to boost economic growth.

If a basket of popular consumer goods cost $100 at the beginning of the year, and the same basket cost $105 at the end of the year. The increase in price by $5 is attributed to inflation.