Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
A general increase in prices and fall in the purchasing value of money
B
A decrease in the overall economic activity
C
A rise in unemployment rates
D
A reduction in the standard of living
Understanding the Answer
Let's break down why this is correct
Answer
Inflation in economics refers to the general increase in prices of goods and services over time, which means that money loses its purchasing power. When inflation occurs, each dollar buys fewer items than before, making it more expensive for people to live and for businesses to operate. For example, if a loaf of bread costs $2 today and inflation is at 5%, that same loaf might cost $2. 10 next year. This impacts trade because countries may find their products becoming more expensive for foreign buyers, which can affect exports and imports.
Detailed Explanation
Inflation means that prices go up over time. Other options are incorrect because Some might think inflation means less economic activity; People might confuse inflation with job loss.
Key Concepts
Inflation definition
Topic
Inflation and Trade Effects
Difficulty
easy level question
Cognitive Level
understand
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