Question

Which of the following statements about prices and inflation is not​ correct? A. Inflation represents a general rise in prices over periods of time. B. The inflation rate shows the percentage change in prices across periods of time. C. The price level measures the average prices of goods and services across the economy. D. Prices generally increase at the same rate across most periods of time.

Answer 1

Answer: Prices generally increase at the same rate across most periods of time.

Explanation:

Inflation means a rapid rise in the price of commodities in a market, and it is normally as a result of scarcity of products or excess flow of money in an economy. Prices on the other hand do not always increase generally, as price could reduce or remain the same overtime.

Answer 2

Answer:

D) Prices generally increase at the same rate across most periods of time.

Explanation:

The inflation rate (or deflation rate) measures the change in the general price level of goods and service within a certain period of time, generally 1 year. Inflation is usually calculated using the consumer price index (CPI) since it is not fixed, it changes year after year. Some inflation is necessary to maintain a healthy economic growth rate, generally between 1 - 2% per year is considered healthy. On the other hand, deflation is a sign of economic recession. The average inflation rate in the US between 1900 - 2011 was 3.22%.