Which of the following is a definition of inflation:
I. a pervasive increase in prices
II. too many dollars chasing too few goods
III. a general decline in the value of money
IV. a general increase in wages -
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A. B. C. D. E. F.C
Inflation is a pervasive increase in prices which is caused by too many dollars chasing too few goods.
A price increase that has some other cause (such as an improvement in a product) is not inflationary.
Therefore these two ideas are inseparable from the definition of inflation. Since prices are increasing, each unit of currency can buy fewer goods. Hence, a general decline in the value of money.