Deﬂation refers to a situation where
A) the price level falls; it could be caused by a shift of AD to the left.
B) the price level falls; it could be caused by a decrease in aggregate supply.
C) the rate of inﬂation falls; it could be caused by a shift of AS to the right.
D) the rate of inﬂation rises; it could be caused by a decrease in aggregate demand.

Question

Quizplus · Accepted Answer

Deflation is characterized by a decrease in the general price level of goods and services, which can occur when aggregate demand (AD) decreases, shifting the AD curve to the left.

Deﬂation Refers to a Situation Where