Question

If the cost of a typical market basket is 400 in 2018, 410 in 2019, and 405 in 2020, then during this period the economy is undergoing: Question 11 options: a) inflation. B) hyperinflation. C) deflation. D) disinflation.

Answer 1

D) disinflation

18->19 is undergo inflation

19->20 is undergo deflation

18-> 20 is undergo inflation in general, while there is deflation in 19->20

it is disinflation

Answer 2

The correct answer is C. If the cost of a typical market basket is 400 in 2018, 410 in 2019, and 405 in 2020, then during this period the economy is undergoing through a process of deflation.

Step-by-step explanation:

If during the year 2018, the cost of a typical market basket is $ 400, and the following year it rises to $ 410, during that period there was a clear inflation situation. Now, if by 2020, that same product lowers its price from $ 410 to $ 405, we can observe that there is a deflation process, because the value of the products begins to decrease.

We speak of deflation when there is a fall in the price of a good, that is, the value of a good changes in negative percentages (from a 20% increase to a 5% price reduction). On the other hand, in desinflation, the percentage of inflation is reduced, but this change in the percentages is still positive (for example, if from one year to another the value of a product passes from an inflation of 20% to one of 10%)