Question

Deflation occurs when

a. there is a decline in the price level.
b. there is a oneminus−time increase in the price level.
c. there is a sustained increase in the price level.
d. there is a decrease in the expected rate of inflation.

Answer 1

Answer: a

Step-by-step explanation:
By definition, deflation occurs when there is a general decline in prices, goods, and services in an economy.
Deflation is the opposite of inflation.
Therefore deflation increases the purchasing power of money while inflation decreases it.