Deflation refers to the situation when
A)the inflation rate decreases.
B)the average of all prices is falling.
C)there is a recession and inflation.
D)prices are not changing.

Question

Quizplus · Accepted Answer

Deflation refers specifically to the sustained decrease in the general price level of all goods and services in an economy, meaning that there is an overall reduction in the average price level across the economy. This is different from simply a decrease in the inflation rate, which can still mean that prices are rising, just at a slower pace. Deflation is also different from a stagnant price level, where prices are not changing at all.

Deflation Refers to the Situation When