A collapse in Buldovia's banking system eventually led to companies unable to borrow money to run their businesses.Firms terminated employees.These circumstances cut into consumer's purchasing power,causing a severe decline in the prices of goods and services,better known as _______.
A)Disinflation.
B)Deflation.
C)Contra inflation.
D)Overproduction.

Question

Quizplus · Accepted Answer

The given scenario describes a situation where there is a decline in prices of goods and services due to a decrease in consumer purchasing power. This is the classic definition of deflation. Disinflation refers to a decrease in the rate of inflation, contra-inflation is not a recognized term, and overproduction refers to a situation where more goods are produced than can be sold, leading to a decrease in prices.

A Collapse in Buldovia's Banking System Eventually Led to Companies