Which of the following best describes inflation?
A. A decrease in unemployment
B. A general increase in prices over time
C. A sudden drop in oil prices
D. A balanced government budget
Answer (2)
The correct answer is letter B. A general increase in prices over timeInflation happens when prices of many goods and services increase over time, and as a result, the value of money decreases. This means that ₱100 today may not be able to buy the same things next year.A common example in the Philippines is the price of rice. If a kilo of rice used to cost ₱40 but now costs ₱50, that means inflation has occurred. When inflation is too high, it becomes harder for families to afford basic needs. This is why inflation is one of the most watched statistics by economists, central banks, and even students, because it directly affects the economy and our daily life.
The correct answer is: B. A general increase in prices over time.Inflation refers to the overall rise in the price level of goods and services in an economy over a period of time. When inflation occurs, the purchasing power of money decreases, meaning you need more money to buy the same items. It does not necessarily relate directly to unemployment, oil prices, or the government's budget.
