Question

For inflation to occur average price increase should be at least __________ per year.

• A. $5\%$
• B. $4\%$
• C. $6\%$
• D. $7\%$

Answer 1

Answer: (A)

$5\%$

Inflation is an economic situation where the general price level in the economy for all the relevant goods has a constant appreciable rise over a considerable period of time. in other words, it refers to a persistent upward movement in the general price level of all relevant goods and services in the economy. According to economic laws, for inflation to occur in an economy the average price for all the relevant goods and services should increase by at least 5% per year.