A sustained increase in the general price level of goods and services is called what?

• A. Inflation
• B. Deflation
• C. Stagflation
• D. Hyperinflation

Answer: (A)

Inflation is a sustained rise in the general price level of goods and services. When prices rise broadly over time, money loses purchasing power, meaning your income buys less than before. This contrasts with deflation (a fall in the general price level), stagflation (high inflation with stagnation and high unemployment), and hyperinflation (an extremely rapid, out-of-control rise in prices). So, the term that describes a persistent increase in the overall price level is inflation.