When does deflation occur?
A) when the rate of price increases slows down
B) when average prices increase more than 50 percent per month
C) when prices decrease
D) when productivity decreases

Question

Quizplus · Accepted Answer

Deflation occurs when there is a sustained decrease in the general price level of goods and services. This means that prices are decreasing, not increasing or slowing down. Option A is incorrect because it describes a scenario of inflation, not deflation. Option B is an extreme case of hyperinflation, not deflation. Option D is not related to deflation at all.

When Does Deflation Occur