A collapse in the national banking system of Lasia has resulted in a condition where prices are declining.This condition is known as:
A)disinflation.
B)contra inflation.
C)overproduction.
D)deflation.

Question

Quizplus · Accepted Answer

A collapse in the banking system leads to a decrease in the amount of money circulating in the economy. This decrease in money supply leads to a decrease in demand for goods and services, which in turn results in a decline in prices. This condition is known as deflation. Disinflation is a situation where the rate of inflation decreases but is still positive. Contra inflation is not a commonly used term in economics. Overproduction may lead to a decrease in prices, but it is not specific to the scenario given in the question.

A Collapse in the National Banking System of Lasia Has