Final answer:
Inflation is a general rise in prices affecting an economy, leading to the reduction of purchasing power. It is measured as an annual percentage increase and signifies an ongoing trend of rising prices in various markets.
Explanation:
Inflation is a general and ongoing rise in the level of prices in an entire economy. It reflects a reduction in the purchasing power per unit of money as each unit of currency buys fewer goods and services due to the rise in prices.
It is measured as an annual percentage increase, and if inflation happens continually, it implies an ongoing rise in prices affecting the economy.
Inflation does not refer to a change in relative prices, but rather to a widespread trend of prices rising in most markets.
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