If the inflation rate is negative, the price level in an economy is
A)negative.
B)constant.
C)rising slowly.
D)falling.
E)rising rapidly.

Question

Quizplus · Accepted Answer

If the inflation rate is negative, it means that the average level of prices in the economy is falling. This is because deflation occurs when prices are decreasing, resulting in a negative inflation rate. Therefore, the correct answer is that the price level in an economy is falling.

If the Inflation Rate Is Negative, the Price Level in an Economy