What is the difference between inflation and deflation?
A)Inflation is a sustained decrease in the price level whereas deflation is a sustained increase in the price level.
B)Inflation is a sustained increase in the price level whereas deflation is a sustained decrease in the price level.
C)Inflation is a measure of relative prices whereas deflation is a sustained increase in the price level.
D)None of the above.

Question

Quizplus · Accepted Answer

Inflation refers to a general increase in the price level of goods and services over time, resulting in a decrease in the purchasing power of money. On the other hand, deflation refers to a general decrease in the price level of goods and services over time, resulting in an increase in the purchasing power of money. Therefore, B is the correct choice. The other options are incorrect in their definitions of inflation and deflation.

What Is the Difference Between Inflation and Deflation