As distinct from reductions in the price level, reductions in the rate of inﬂation are referred to as
A) dollar depreciation.
B) stagﬂation.
C) deﬂation.
D) disinﬂation.

Question

Quizplus · Accepted Answer

Reductions in the rate of inflation are referred to as disinflation. This means that the economy is still experiencing inflation but at a slower rate than before. Deﬂation, on the other hand, refers to a decrease in the overall price level. Stagflation occurs when the economy experiences both high inflation and high unemployment, which is not the same as simply a reduction in the inflation rate. Dollar depreciation refers to a decrease in the value of the U.S. dollar relative to other currencies, which is not directly related to changes in inflation.

As Distinct from Reductions in the Price Level, Reductions in the Rate