Deflation means a decrease in:
A) the rate of inflation.
B) the prices of all products in the economy.
C) homes, autos, and basic resources.
D) the general level of prices in the economy.

Question

Quizplus · Accepted Answer

Deflation refers to a decrease in the general level of prices in the economy, which means that the prices of various goods and services are falling. This is opposite to inflation, which refers to a general increase in the prices of goods and services over time. Choice A is incorrect because deflation is not a decrease in the rate of inflation but rather the opposite. Choice B is also incorrect because not all prices in the economy may necessarily decrease during deflation, only the general level of prices. Choice C is too specific to be the correct answer since while prices may decrease for these specific products, that does not mean deflation is occurring in the entire economy.

Deflation Means a Decrease In