Question

13. Latoya is a college student and her parents are glad that it costs less for her to call them now, than it did for them to call their parents n long distance when they were in college. Still she observed that she is paying more for her tuition than her parents did twenty years ago. She also discovers that the price for gasoline and for other goods and services increased even during her first semester. In this way she learns that inflation means:

1. all prices are rising, but at different rates
2. all prices are rising an at the same rate
3. prices in the average are rising, although some particular prices may be falling
4. real incomes are rising

Answer 1

Option C. Prices in the average are rising, although some particular prices may be falling

Explanation: Inflation refers to an increase in the general price level over a period.