What is the general definition of inflation?

Inflation is defined as a sustained increase in the general price level in an economy over a period of time. This means that prices for a broad range of goods and services are rising consistently, which decreases the purchasing power of money—the amount of goods and services that can be bought with a given amount of money.

When inflation occurs, it reflects changes in the overall cost of living, impacting individual consumers and businesses in various ways. This definition captures the ongoing nature of inflation, which distinguishes it from just a temporary variation in prices or changes that might be sector-specific, as seen with specific commodities or during short time frames. The continuous increase in prices can be influenced by factors like demand-pull inflation, where demand outpaces supply, or cost-push inflation, where production costs increase.

The other choices reference concepts that do not accurately describe inflation. For instance, a decrease in prices, a rise in unemployment, or a temporary spike only in specific commodities do not encompass the broader, sustained nature of general inflation.