Certified Professional Contract Manager (CPCM) 2025 – 400 Free Practice Questions to Pass the Exam

Inflation is correctly defined as an ongoing general rise in prices. This phenomenon reflects the increase in the average price level of goods and services in an economy over a period of time, leading to a decrease in the purchasing power of money. As inflation progresses, each unit of currency buys fewer goods and services, affecting consumers and businesses alike.

Focusing on the other definitions, a decrease in overall prices over time describes deflation, which is the opposite of inflation. The stable pricing of goods suggests a state of equilibrium in the market, but it does not characterize inflation. Similarly, the deflation of currency values could seem relevant, yet it does not encapsulate the essence of inflation as it refers more to a devaluation rather than a rise in overall prices. Thus, the ongoing rise in prices encapsulates the fundamental concept and implications of inflation in economic contexts.