Which of the following is an example of inflation?

Question

a. The price of gasoline doubles overnight.
b. The general level of prices increase by five percent in one year.
c. The price of bread increases faster than income levels.
d. Wages of workers in the auto industry increase.

Answer 1

The best example of inflation from the options provided is:

b. The general level of prices increase by five percent in one year.

Inflation is defined as a general increase in prices and a fall in the purchasing value of money. The other options describe specific price changes or wage changes rather than a general increase in prices across the economy.