In an economy with inflation, money loses some buying power each year, but it remains money. In such situation, money cannot be said to be a perfect store of value. The opposite of inflation is deflation, a sustained decrease in the general price level of goods and services. The common measure of inflation is the inflation rate, the annualized percentage change in a general price index. Hence, in an economy with inflation, money loses some buying power each year, but it remains money. Read below about inflation.
In economics, inflation is a general increase in the prices of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reduction in the purchasing power of money.
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