In a recovery phase, a falling rate of inflation means
That the price level is
A) falling.
B) falling at an increasing rate.
C) rising by smaller and smaller percentages.
D) falling at a constant rate.

Question

Quizplus · Accepted Answer

In a recovery phase, when the rate of inflation is falling, it means that the price level is still rising, but at a decreasing rate. This is because the economy is growing, and the excess capacity in the market is decreasing, leading to a decrease in the rate of price increase. Therefore, the best choice is C, which states that the price level is rising by smaller and smaller percentages.

In a Recovery Phase, a Falling Rate of Inflation Means