Discussion
Inflation is a sustained increase in the general level of __________.
Answer: C
Correct answer: Prices
Inflation is a sustained increase in the general level of prices, measured by a price index such as the consumer price index or the wholesale price index.
Two qualifications are built into the definition. It must be sustained, so a one-off jump in a single month is not inflation; and it must be general, so a rise in the price of one commodity, however sharp, is a relative price change rather than inflation. Because it erodes the purchasing power of money, controlling it is the central object of monetary policy.
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