If the inflation rate decreases from 5% to 3%, the economy is undergoing
A) deflation.
B) hyperinflation.
C) disinflation.
D) stagflation.

Question

Quizplus · Accepted Answer

Disinflation occurs when the rate of inflation decreases, but prices are still increasing. In this case, the inflation rate decreased from 5% to 3%, indicating a slowdown in the rate of price increases, but not a complete reversal in direction (which would indicate deflation). Hyperinflation refers to a situation where the inflation rate is extremely high and out of control, and stagflation occurs when inflation is high and the economy is stagnant or experiencing low growth.

If the Inflation Rate Decreases from 5% to 3%, the Economy