What term describes the general rise in the price level in an economy, typically measured by changes in a representative basket of goods and services?

• A. Occurs when the general price level in an economy continually rises; measured by changes in the cost of a representative basket of goods and services purchased by the average household over a period of time
• B. A decrease in the general price level
• C. A measure of the price of money
• D. An increase in unemployment

Answer: (A)

Inflation is the general rise in the price level in an economy, typically measured by changes in the cost of a representative basket of goods and services purchased by the average household over time. This is usually tracked by the consumer price index, which reflects how the cost of living changes. The other statements describe a fall in prices (deflation), a measure that's about the price of money rather than overall price levels, and a rise in unemployment, which relates to the labor market rather than prices.