If the consumer price index falls from 120 to 116 in a particular year, the economy has experienced
A)inflation of 4 percent.
B)inflation of 3.33 percent.
C)deflation of 3.33 percent.
D)deflation of 4 percent.

Question

Quizplus · Accepted Answer

Deflation occurs when the consumer price index (CPI) decreases. The percentage change is calculated as ((116 - 120) / 120) * 100 = -3.33%, indicating deflation of 3.33 percent.

If the Consumer Price Index Falls from 120 to 116