Group of answer choices.
A. The rate of return has increased significantly.
B. There has been a lot of inflation in the market.
C. Prices for goods are experiencing compounding interest.
D. Asset allocation is on the rise in the economy.
Answer:
B. There has been a lot of inflation in the market.
Explanation:
Inflation can be defined as the persistent general rise in the price of goods and services in an economy at a specific period of time.
Generally, inflation usually causes the value of money to fall and as a result, it imposes more cost on an economy.
When this persistent rise in the price of goods and services in an economy becomes rapid, excessive, unbearable and out of control over a period of time, it is generally referred to as hyperinflation.
Furthermore, high inflation is typically a sign of a struggling economy because the wages earned by consumers cannot keep up with the increase in prices of goods and services.
In this scenario, a gallon of milk cost $2 and a gallon of gas cost $4 last month. This month, milk is $4 per gallon and gas is $6 per gallon.
Therefore, an economist would best describe what is happening as having a lot of inflation in the market.
