In a recovery phase, a falling inflation rate means that the price level is rising by smaller and smaller percentages.

Question

Quizplus · Accepted Answer

Inflation rate measures the percentage rate of change in the price level over time. When the inflation rate falls, it means that the price level is increasing at a slower pace, which implies that inflation is still present, but its intensity is decreasing. Thus, a falling inflation rate means that the price level is rising by smaller and smaller percentages.

In a Recovery Phase, a Falling Inflation Rate Means That