Question

12 inflation is the reason a gallon of gas in 1979 was $.86 per gallon but in 2010 the same gallon of gas was $2.58 per gallon
true
false

Explanation:

Define inflation and its effect on prices

Inflation is the general increase in prices and fall in the purchasing value of money over time.

Analyze the historical price change

The price of a gallon of gas rising from \$0.86 in 1979 to \$2.58 in 2010 reflects the overall decrease in the purchasing power of the dollar, which is driven by inflation.

Determine the truth value

Since the statement correctly attributes the long-term rise in nominal gasoline prices to inflation, the statement is true.

Answer:

• True (Correct answer)
• False