Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Inflation is decreasing
B
Inflation is stable
C
Inflation is increasing
D
Inflation is irrelevant
Understanding the Answer
Let's break down why this is correct
Answer
An increase in the Consumer Price Index (CPI) usually means that the inflation rate in an economy is rising. The CPI measures how much prices for goods and services that people commonly buy are changing over time. When the CPI goes up, it indicates that consumers are paying more for the same items, which suggests that the overall cost of living is increasing. For example, if the CPI rises by 2%, it means that, on average, prices have increased by that amount compared to the previous period. This increase can affect people's purchasing power, making it important to monitor for economic stability.
Detailed Explanation
When the Consumer Price Index goes up, it means prices for goods and services are rising. Other options are incorrect because Some might think that rising prices mean inflation is going down; It's a common mistake to think stable prices mean inflation is steady.
Key Concepts
inflation rate
Topic
Understanding Consumer Price Index
Difficulty
easy level question
Cognitive Level
understand
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