What term refers to a rise in prices and a decrease in the value of money?

The term that refers to a rise in prices and a decrease in the value of money is inflation. When inflation occurs, the purchasing power of money decreases, meaning that consumers are required to spend more money to buy the same goods and services compared to a previous time. This phenomenon is often measured by the Consumer Price Index (CPI), which tracks the changes in price levels over time.

Inflation can be caused by various factors, such as increased demand for goods and services, higher production costs, or expansive monetary policy by governments. It is a key economic indicator that can influence decisions made by policymakers, businesses, and consumers. In the context of economic health, a moderate level of inflation is often viewed as a sign of a growing economy, while hyperinflation can lead to significant economic challenges.

The other terms presented have distinct meanings: deflation refers to a decrease in prices and an increase in the value of money; stagflation combines stagnant economic growth, high unemployment, and high inflation; and recession denotes a period of economic decline when GDP falls for two consecutive quarters. Understanding these terms is essential for analyzing economic conditions and their implications.