Inflation is a …………….

Step 1: Analyze the question The question asks for the definition of inflation, a basic concept in Economics.

Step 2: Explain the concept Inflation is a sustained (persistent) rise in the general price level of goods and services in an economy over time. As a result, each naira buys fewer goods and services than before, so the purchasing power of money falls.

Three key words to remember:

• Persistent/sustained: a one-off price jump does not count.
• General: it affects prices across the economy, not just one item.
• Price level: it concerns the average level of prices.

Step 3: Test each option

• A. General increase in the price of a single product: Wrong. "General" refers to many goods, not one. A rise in the price of a single product is only a relative price change.
• B. Period of economic recession: Wrong. A recession is a decline in output and economic activity. Inflation is about prices, not output.
• C. Period of hunger: Wrong. That describes famine or food scarcity.
• D. Period of excessive money: Not the best answer. Excess money supply is one cause of inflation (demand-pull or "too much money chasing too few goods"), but it is not the definition.
• E. Persistent rise in the general price level: Correct. This is the standard definition.

Step 4: Answer The correct option is E.

Exam tip: For definition questions, look for the option with the key phrases "persistent/sustained" and "general price level". Don't confuse a cause (excess money) with the definition. Also remember the opposite terms: deflation is a persistent fall in the general price level, and disinflation is a fall in the rate of inflation.