Deflation refers to a decrease in the general price level of goods and services, which increases consumers' purchasing power, not shrink it. It was not prevalent during the oil shocks of the 1970s, which were characterized by inflation. Deflation has not been persistent in the U.S. since the Great Depression.

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Deflation

Question 41

Multiple Choice

Deflation:

A) was prevalent during the oil shocks of the 1970s.
B) will cause consumers' purchasing power to shrink.
C) has been persistent in the U.S. economy since the Great Depression.
D) none of these.

Correct Answer: