A fall in the inflation rate from 8 to 2 percent is an example of deflation.

Question

Quizplus · Accepted Answer

A fall in inflation rate from 8 to 2 percent is not an example of deflation as deflation is a sustained fall in the general price level of goods and services over a period of time. A fall in inflation rate only means that the rate of increase in general price levels has slowed down, which is still inflationary. Deflation, on the other hand, involves an actual decrease in general price levels.

A Fall in the Inflation Rate from 8 to 2