What term describes the overall increase in prices and/or the decrease in the value of money?

The correct term for the overall increase in prices and/or the decrease in the value of money is inflation. Inflation occurs when the general price level of goods and services rises, leading to a reduction in the purchasing power of money. This means that as prices rise, each unit of currency buys fewer goods and services than it did previously.

Inflation is typically measured by using indices like the Consumer Price Index (CPI), which tracks the prices of a basket of consumer goods over time. Moderate inflation is often considered a sign of a growing economy, but high rates can lead to economic instability and uncertainty, affecting consumers and businesses alike.

In contrast, deflation refers to a decrease in the general price level of goods and services, leading to an increase in the value of money. A recession is an economic decline that lasts for a prolonged period and is characterized by reduced economic activity, not necessarily related to price increases. Stagnation describes a situation where economic growth is slow or stagnated, which can occur with or without inflation. Understanding these distinctions helps clarify why inflation is the appropriate term for the situation described in the question.