Which term describes a situation in which there is a reduction in the rate of inflation from 4% to 3% per year?
A) hyperinflation
B) inflation
C) deflation
D) disinflation

Question

Quizplus · Accepted Answer

Disinflation is a situation where the rate of inflation decreases, but inflation still continues to occur. In this case, the rate of inflation has decreased from 4% to 3% per year, but there is still some inflation present. Hyperinflation would describe a situation where there is an extremely high rate of inflation, while deflation would describe a situation where there is a general decrease in the level of prices. Therefore, the best choice in this case is disinflation.

Which Term Describes a Situation in Which There Is a Reduction