Which term describes a sustainable increase in the general or average level of prices along with a decrease in the value of money?

Inflation is defined as the sustained increase in the general or average level of prices of goods and services in an economy over a period of time. This phenomenon leads to a decrease in the purchasing power of money, meaning that each unit of currency buys fewer goods and services than it did previously. When inflation occurs, consumers must spend more to maintain the same standard of living, effectively indicating a decline in the value of money.

Inflation is a normal aspect of economic activity and can occur due to various factors such as demand-pull inflation, where increased demand for goods and services exceeds supply, or cost-push inflation, where the costs of production increase, leading producers to raise prices.

The other terms, while related to price levels and economic activity, do not convey the same meaning as inflation. Deflation refers to a decrease in the general price level of goods and services, leading to an increase in the value of money. Stagflation is characterized by stagnant economic growth, high unemployment, and high inflation occurring simultaneously, which is distinctly different from pure inflation. Hyperinflation represents an extremely high and typically accelerating inflation rate, well beyond standard inflationary periods, often leading to a complete loss of confidence in the currency.

Thus, the correct