8. What does it mean to say that the inflation rate last year was 7%?

   1. A) All prices are 5% less at the end of the year than they were at the beginning of the

      year.

   2. B) The price of specific products increased 7% between the beginning and the end of the

      year.

   3. C) On average, a typical basket of goods costs 7% more at the end of the year than it did

      at the beginning of the year.

   4. D) The general purchasing power of the dollar has increased 7% between the beginning of

      the year and the end of the year.