What term describes a sustained rise in the general level of prices of goods and services?

• A. Deflation
• B. Recession
• C. Inflation
• D. Stagnation

Answer: (C)

The term that describes a sustained rise in the general level of prices of goods and services is inflation. Inflation occurs when there is an increase in the overall price level, which means that the purchasing power of currency decreases; you need more money to buy the same amount of goods and services over time. This can be caused by various factors, such as an increase in demand, rising production costs, or expansive monetary policies.

The other terms are related economic concepts but do not pertain to a general increase in prices. For instance, deflation refers to a decline in the general price level, meaning prices are falling rather than rising. A recession is a period characterized by a decline in economic activity, usually defined by a fall in GDP for two consecutive quarters, and does not specifically denote a rise in prices. Stagnation describes a situation where there is little or no economic growth, often accompanied by high unemployment, but it does not directly relate to rising prices either. Thus, inflation is the appropriate term for a sustained increase in prices.