Question

What do inflation rates measure?

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A. The rates at which businesses can borrow money
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B. The total worth of all products produced within a country's borders
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C. The speed with which general prices are rising
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D. The value of one currency compared to another

Answer 1

C. The speed with which general prices are rising

Step-by-step explanation:

Inflation measures the rate at which the general prices of goods and services are increasing in an economy. During inflation, the purchasing power of a country's currency is eroded. Inflation means a selected basket of goods will cost more this period than it did in the previous season.

The consumer price index or CPI is the most acceptable index used in determining the rate of inflation. Inflation may result from high economic growth where firms and individuals have increased incomes resulting in too much money in circulation. A moderate level of inflation is required to promote spending and sustain favorable economic growth.