Suppose that the Consumer Price Index for a particular economy rose from 110 to 120 in year 1, 120 to 130 in year 2, and 130 to 140 in year 3.We could conclude that this economy is experiencing
A)accelerating inflation.
B)deflation.
C)disinflation.
D)a constant rate of inflation.

Question

Quizplus · Accepted Answer

The economy is experiencing disinflation because the rate of inflation is decreasing each year. The CPI increases by 10 points each year, but the percentage increase is smaller each year (9.09% in year 1, 8.33% in year 2, and 7.69% in year 3).

Suppose That the Consumer Price Index for a Particular Economy