Which of the Following Is True of Inflation

question 88

Multiple Choice

Which of the following is true of inflation?

• A) It is an increase in the general price level of goods and services.
• B) The purchasing power of money increases as the result of inflation.
• C) Inflation is similar to interest payments on future money income, such as pensions and receipts from outstanding loans.
• D) Inflation has no effect on real income.

---

Definitions:

Market Economy

A market system in which investment, production, and distribution decisions are driven by the forces of supply and demand, with the prices of goods and services being set in a free pricing system.

Abraham Lincoln

The 16th president of the United States, who served during the Civil War and is remembered for abolishing slavery.

Robert Fulton

An American engineer and inventor credited with developing the first commercially successful steamboat in the early 19th century, significantly impacting transportation.

Steamboats

Paddlewheelers that could travel both up- and downriver in deep or shallow waters; they became commercially viable early in the nineteenth century and soon developed into America’s first inland freight and passenger service network.