When does deflation exist in the economy?
A)whenever the economy experiences a contraction
B)whenever the overall price level rises
C)whenever the price of a good decreases
D)whenever the overall price level falls

Question

Quizplus · Accepted Answer

Deflation exists in the economy whenever the overall price level falls. This means that the prices of goods and services are declining over time, indicating a decrease in the purchasing power of money. It is opposite to inflation, where the overall price level increases. A decrease in the price of a single good or product does not necessarily indicate deflation in the economy as a whole.

When Does Deflation Exist in the Economy