Question

Deflation occurs when A. there is a sustained increase in the price level. B. there is a decrease in the expected rate of inflation. C. there is a oneminus−time increase in the price level. D. there is a decline in the price level.

Answer 1

The correct answer is letter "D": there is a decline in the price level.

Step-by-step explanation:

Deflation is an economic concept used to describe a phase in which goods and services prices decrease. Decreases in money supply, government spending, consumer demand, and business investment have all been cited as causes of deflation. This typically occurs when there is reduced demand for products and services and higher rates of unemployment during an economic crisis.

Answer 2

D) there is a decline in the price level.

Step-by-step explanation:

Inflation refers to an increase in the general price level of a country, while deflation is exactly the opposite. Deflation represents a decrease in the general price level of a country. They are both calculated the same way, only that inflation is much more "famous" and notorious since it happens very oftenly, while deflation is very rare.

But that doesn't mean that deflation is good, since it generally represents an economic decline or recession. A low inflation rate is a sign of a healthy economy because it shows that the economy is growing.