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During a period of inflation, are all prices rising? Explain your answer.

During a period of inflation, are all prices rising? Explain your answer.

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Answer #1

No, at the time of inflation all the price are not rising but the average price level in the market are rising, for example there are 5 goods in the market and at an average three goods have registered a price rise of $10 from the previous level. but the other two goods have experienced a fall in the price level by 5.

Overall the price of the goods will increase by 7.5, that will be considered as an inflation In the economy and the method of calculation overestimate it because it ignores the price of the goods that have decreased.

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