What is the difference between disinflation and deflation?
A) Disinflation is a smaller increase in prices, whereas deflation is a decrease in prices.
B) Deflation is a smaller increase in prices, whereas disinflation is a decrease in prices.
C) The Fed can engineer disinflation but not deflation.
D) There is no difference between disinflation and deflation.

Question

Quizplus · Accepted Answer

Disinflation refers to a situation where the rate of inflation is decreasing, meaning there is still a positive increase in prices, but at a slower rate. Deflation, on the other hand, refers to a situation where there is a sustained decrease in prices, with negative inflation. Therefore, option A is the correct choice, as it accurately describes the difference between the two terms.

What Is the Difference Between Disinflation and Deflation