Disinflation refers to a situation where:
A) Price level falls, but the rate inflation does not
B) Price level rises, but the rate of inflation does not
C) The rate of inflation falls, but the price level does not
D) The rate of inflation rises, but the price level does not

Question

Quizplus · Accepted Answer

Disinflation is a decrease in the rate of inflation, which means prices are still increasing but at a slower rate. Therefore, the price level does not fall, but the rate of inflation declines. Option A is incorrect as the price level falls along with the rate of inflation. Option B and D are not relevant to the definition of disinflation.

Disinflation Refers to a Situation Where