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 the above.

Question

Quizplus · Accepted Answer

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