Final answer:
Inflation, as defined before 1990, is the ongoing and general rise in the level of prices for goods and services in an economy, resulting in a decrease in the purchasing power of money. It is not the same as changes in relative prices and is an ongoing process rather than a one-time event.
Step-by-step explanation:
Inflation is defined, according to dictionaries printed before 1990, as a sustained increase in the general level of prices for goods and services. It represents an annual percentage increase whereby, as inflation rises, the purchasing power of money falls, with each currency unit buying fewer goods and services.
Inflation is also distinguished from a change in relative prices. For example, if the price of tuition goes up but the price of laptops goes down, this is not inflation. Inflation indicates a situation where there is a general and ongoing rise in prices across most markets in the economy, impacting the overall cost of living.
Lastly, inflation is an ongoing process. Price increases from supply-and-demand are singular events, indicating a shift from old to new equilibrium. In contrast, inflation implies a continuous rise in prices over time. If inflation were to occur only for a single year and then stop, it would no longer be considered inflation as per the definitions before 1990.