Inflation leads to which effect on the price levels of goods and services in an economy?

Practice question from NISM XV Mock Test 5 — bank. The correct answer is highlighted below with a full explanation.

Options

A

Decrease
Increase

Correct answer
C

No change
D

None of the above

Why this is the answer

Inflation refers to a sustained rise in the general price level of goods and services over time. As inflation increases, purchasing power declines and consumers must pay more for the same goods and services.

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