A one-time increase in the price level is
-
- rarely reported by the news media as inflation, but is nevertheless considered to be inflation by economists
- regularly reported by the news media as inflation, but is not considered to be inflation by economist.
- regularly reported by the news media as inflation because it is considered to be inflation by economists
- None of the above
Correct Answer: regularly reported by the news media as inflation, but is not considered to be inflation by economist.
Answer Explanation
For the clarification of the terminology and implications of price changes, it is essential to understand the distinction between a one-time increase in the price level and inflation. The option (b), which is “regularly reported as inflation by the news media, but not considered inflation by economists,” accurately captures this nuanced situation. Let us examine the reasoning behind the choice:
Defining a One-Time Increase in the Price Level:
A one-time increase in the price level occurs when a wide range of goods and services are suddenly and abruptly discounted. Among the reasons for this could be supply shocks, changes in input costs, or temporary disruptions of production.
While sustained inflation involves a rise in the general price level over time, a one-time increase is a transient event that may not be indicative of a longer-term trend.
Media’s Reporting Perspective:
News media often focus on dramatic and noteworthy events that grab attention from the public. As a result, a one-time increase in the price level, especially if it leads to a spike in consumer prices, might be considered a significant economic development. Households can perceive rising costs and financial challenges as a result of this coverage.
Economists’ Perspective on Inflation:
Economists view inflation from a broader and more analytical perspective. Inflation can be categorized into short-term price fluctuations, such as one-time increases, and sustained inflation, which refers to an increase in prices over a long period of time. Inflationary pressures may not necessarily be reflected in a one-time price increase, according to economists.
Why the other options are not correct
a. Rarely reported by the news media as inflation, but nevertheless considered inflation by economists:
This option suggests a discrepancy between the news media’s reporting and economists’ perspectives. In spite of the fact that the news media often refers to one-time price increases as inflation, economists generally agree that such an event is distinct from sustained inflation.
It is important for economists to distinguish between short-term price fluctuations and long-term inflation trends.
c. regularly reported by the news media as inflation because it is considered to be inflation by economists
Because it is considered to be inflation by economists, it is regularly reported by the news media as inflation: While the news media may report a one-time increase in price levels because it impacts consumers and attracts public attention immediately, economists distinguish between sustained inflation and isolated price spikes. According to economists, inflationary pressures are influenced by broader economic trends and underlying factors.
d. None of the above:
The correct option (b) acknowledges the discrepancy between news media reporting and economists’ understanding of a one-time price increase. So, to say none of the above is incorrect.
Conclusion
As a result, a one-time increase in prices can be regularly reported by the news media as a form of inflation due to its immediate impact on consumers and public interest. Short-term price fluctuations, however, are distinguished from sustained inflation, which involves a continuous increase in the general price level over time, according to economists.
A clear understanding of this distinction is crucial for making informed policy decisions and accurately interpreting economic developments.
Countries with the highest inflation rates are likely to have
I am Bibisha Shiwakoti a final year BBS student from Janapremi College. I have completed my higher secondary education at Kalinchowk Secondary School.
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