Final answer:
Inflation is a sustained increase in the general level of prices for goods and services in an entire economy, not just a change in relative prices or a one-time price increase.
Step-by-step explanation:
Inflation is defined as a sustained increase in the general level of prices for goods and services in an entire economy. This is distinct from a change in relative prices, where only some prices change while others may remain the same or even decrease. Inflation is not about just any price increase; it is about an ongoing trend where the prices of most goods and services continue to rise over time. Consequently, this reduces the purchasing power of money, as the same amount of currency will now buy less than before. A key measurement for inflation is the consumer price index, which helps track this ongoing change in price levels. Low inflation is generally considered desirable as it corresponds with a stable economy where wages can keep up with the cost of living.