Inflation rates indicate price level changes

Steps:

• Inflation rate is the percentage increase in the price level over a period.
• In January, the rate changed to 2%, a positive value, so prices rose.
• In March, the rate was 4%, also positive, so prices rose.
• Both months show rising prices despite varying rates.

Why D is correct:

• Positive inflation rates (2% and 4%) mean the price level rose in both periods, per the definition of inflation as a sustained increase in general price levels.

Why the others are wrong:

• A: January prices rose, not fell (2% > 0).
• B: Prices rose in both months, none fell.
• C: March prices rose, not fell (4% > 0).

Final answer: D