Q. Which of the following is/are comes under the definition of Inflation?
1.A rise in the general level of prices
2.A sustained rise in the general level of prices
3.The general level of prices is falling over a period of time
Choose the correct answer from below given codes:

[A] 1 only

[B] 1 and 2 only

[C] 2 and 3 only

[D] 1, 2 and 3

Answer: B
Notes:

Explanation: A rise in the general level of prices; a sustained rise in the general level of prices; persistent increases in the general level of prices; an increase in the general level of prices in an economy that is sustained over time; rising prices across the board —is inflation.

  • These are some of the most common academic definitions of inflation.
  • If the price of one good has gone up, it is not inflation; it is inflation only if the prices of most goods have gone up.
  • When the general level of prices is falling over a period of time this is deflation, the opposite situation of inflation. It is also known as disinflation.

Source: TMH Ramesh Singh