Answer
Inflation is the overall rise in the levels of prices. Inflation and unemployment are inversely related as seen on the Phillip's curve. Inflation is caused by government over printing of currency. The overall rise in the supply of money in the economy causes inflation and has occurred in countries such as Germany in 1921 with newspapers.
Work Step by Step
In almost all cases of large or persistent inflation, the-culprit is growth in the quantity of money. When a government creates large quantities of the nation’s money, the value of the money falls. In Germany in the early 1920s, when prices were on average tripling every month, the quantity of money was also tripling every month.
This question is testing your knowledge of vocabulary. To determine what causes inflation think to yourself " why do prices rise?" Price rises only when there is too much money because if it didn't do so scarcity would occur as produce would run shortages.
